Questions regarding recent property appraisal!

[Matt Romano]

Have a 2-family under contract that is scheduled to close next week! Super excited to get started as this is my first purchase, and by no means anything close to my last. I will be house hacking my way towards financial freedom! :) Anyway, I got the property appraised about a week ago (with the results this past week).  And, the appraisal came back "perfect", according to both my agent and lender.  I didn't know what to expect as far as the $ and the anticipation was killing me, especially because I had to outbid by $12k over asking price to lock this one in.  I was pleased to see how detailed and in depth the appraiser went to determine the value they come up with.  But I just found it ironic that the property appraised for exactly $1,000 more than what I have it under contract for. I asked both my agent (very professional, and investor herself), and the lender (also very investor friendly) why this was, and they both said that it's because it means that it is at LEAST worth the amount I'll be borrowing / amount I have it under contract for. Apparently I wouldn't know if it was even worth significantly more than what I'm paying. Maybe this varies between who you finance with and who they send out>? But I would love to hear your thoughts about this! Thanks in advance

-Matt

[Russell Brazil]

Originally posted by @Matt Romano:

Thank you @Russell Brazil for the response.  So basically the appraised amount doesn't necessarily even reflect the TRUE value of the home, but more so that its at least worth what the bank is lending me / what I'm paying for it.  aka: The property was listed for $240k, I have it under contract right now for $252k, and it appraised for $253k.  

 If you are paying $252k for it...that is by definition the market value of the house.  The appraisal is done to protect the lenders interest in the property.  If everyone is doing their job properly, the appraisal should always be at the contract price, or slightly above.