What is an appraisal? It’s an opinion of value. A very educated one, mind you, but an opinion just the same. As with anything where an opinion is involved, you can get different values from different appraisers. Usually, there isn’t a big difference from one to another, but sometimes there is a veritable gulf between two different opinions of value.
Years ago, I worked for a mortgage company. Interest rates were low and values were climbing rapidly. A woman wanted to refinance her house. It was an amazing house in a quirky neighborhood of older houses. The woman was an artist and her house reflected her personality and her art. Okay, it was a Swiss Chalet style house, painted indigo blue and yellow,inside and out.
Anyway, the first appraiser who went out absolutely hated the house. And the value he gave it reflected his opinion. He said that if she ever foreclosed, no one would want to buy the house. That it was so outside the norm for the neighborhood that it was actually worth less than comparable homes.
Outraged,the woman requested a second appraisal. The next appraiser went out and appraised the house $40,000 higher than the first appraiser. She thought the house was adorable and that it would be easy, in an artsy quirky neighborhood,to find someone who would want to buy such a house.
So, it’s an opinion. That example was a little extreme maybe, but it illustrates the point well.
An estate appraisal might typically show a low value. Refinance appraisals differ from purchase appraisals. The tax assessor will often be a little high in value because his goal is different from the homeowners. The end product sometimes dictates the process.
What’s the difference between an appraisal and what a real estate agent does when they each estimate a value? I’ll discuss those differences in the next article.
(c) 2006 Susan Pruden