How Reliable Are Appraisals?

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Here's a pretty good rule of thumb to go by:If you agree with the appraisal and it benefits you the appraisal is pretty accurate.If you disagree with the appraisal and it does not benefit you, the appraiser is wrong and an idiot and the appraisal is garbage.

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I am a former Real Estate Appraiser, appraisals are a lot more accurate than a agent appraisals. For Real Estate Appraiser there is noting in it for themand a lot more risk, because if they come up with a wrong value they can be suedfor the loss of equity. Real Estate agents are looking more for a value which the market canbare.Hope that helps

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If you have a fully executed arms-length purchase contract, and read the definition of market value contained in any appraisal report, you will see that the purchase price specified on that purchase contract comes pretty damn close to exactly meeting that definition. This is why ~90% of purchase transaction appraisals come in right at value.If the appraisal comes in high, that means you're getting a smashing deal and good for you. Don't let the seller know this fact. If the appraisal comes in short, it means the appraiser thinks you are being stupid with your money. She or he could certainly be wrong, but that's his or her opinion.If you want assurances that the appraisal is credible and accurate, read it. Study it. Look at the comps, look at the adjustments, look for pertinent information that may have been overlooked. For example last month, one of the comps on an appraisal was a flip. He did not use the post-reno flipped transaction from two months prior, he used the flipper's pre-reno acquisition transaction from seven months prior. "Does that make sense?" In this case it didn't, because the subject property was closer in condition to the post-reno than pre-reno. He should have used post-reno and adjusted downward, but he used pre-reno and adjusted upward. We ordered another appraisal. That one used that same comp, but used the post-reno transaction and adjusted downward for condition, it came in at a higher value, was deemed more credible by our internal appraisal review folks, and the first appraisal was disregarded for that reason.

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@Bobby Kohler appraisers are just regular people. They get lazy and do bad jobs, and they also do stellar jobs. Because every property is different, and every neighborhood has the good and bad areas, or the preferred finishes, etc., there is a lot of room for error.I've had appraisals that came in exactly where it was expected. This is the norm. I'm closing this week on a property where the appraisal came in over the purchase price... and as @Chris M. said, I'm not telling the seller! I also recently filed a complaint against an appraiser that likely didn't even look at the property and ended up appraising 20% below value. I scrapped it and had a new appraisal and it came in right where we expected.Appraisals are not exact science and there is the potential that they will be wrong. Use your agents, lenders, county records, and whatever other sources you have to try and understand it better and you will be able to know if the appraisal is accurate or not.

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The appraisals most see are bank appraisals. I never got my license, but was an apprentice for a year. Decorating, curb appeal and short term improvements that help sell a home are not allowed. Square footage can be misleading. Some appraisers will count a well designed 2000 SQ ft home with a 1500 sq ft home (with a "brother in law six pack , weekend addition") that is thrown on the back of the home the same. An appraisal is more useful in my part of the country (Albuquerque agents are very fond of reducing their opinion of value by only cost per square foot. You'll hear "this neighborhood goes for $189 a foot or $200". They don't take into account condition or that larger home almost always have a lower cost per square foot as smaller homes in the same area.So, "it's complicated"

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That helps a lot...thanks Paul

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Not me personally, I just read it in another forum post somewhere, so I was just asking a general question. Thanks @Chris M

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@Bobby Kohler why do you think an appraiser is trying to mislead you?