“My friend is looking at a house that’s listed for $550,000, but was appraised for $575,000. He thinks it must be underpriced, but I’ve heard that appraisals aren’t always accurate. Do you agree?”
Answer:
Yup. The appraisers I know are hard-working, smart professionals and usually the figures they come up with are right on or close.
But I’ve seen WAY too many appraisals that were WAY off the mark, so I don’t blindly trust any appraisal. There’s not a consistent pattern, but it seems that refinance appraisals tend to be high and sales appraisals tend to be close or low.
I could tell you dozens of stories of clients who came to me saying their home or rental was worth $X due to an appraisal they’d had. Then I “ran the comps” and it was clear the actual market value was very different from the appraisal.
In short, MAYBE your friend has found a bargain. But his agent should advise him and show him comparable sales information so he can draw his own conclusions…
