Dear Kelly Kellogg, The Appraisal Expert,
When an appraiser has knowledge of a contract/offer price, does it influence their opinion of market value?
Did you know that when an appraisal is completed for lender loan purposes, the appraiser is required to review the sales contract? Complete impartiality is not out the window for a seasoned, well-trained appraiser. It is my professional opinion that we should be aware of and consider what prospective buyers are willing to pay for a home. An appraiser is to remain objective and utilize the most recent closed sales and active/pending comps in close proximity to the subject. A well-trained professional appraiser should keep in mind that a "Comparable" is what a typical prospective buyer of the subject would consider as an alternative purchase. As an appraiser, I must be able to substantiate and support my opinion of market value utilizing the most recent, similar comparable sales that are available in the subject's neighborhood while remaining impartial. It is rare that my estimate of market value is the same as an offer or contract price. My opinion of market value is typically above or below a contract price. Additionally, a good appraiser is aware that some buyers may submit offers above market to beat out other offers just to get their contract/offer accepted. Many of my cash buyer clients and Realtors have stated that they put in a contingency in the contract/offer that states that the contract is subject to the appraised value coming in at or above the contract price. They rely on the fact that an appraisal is an unbiased opinion of market value.
Thank you, we'll be in touch!