Question:
“My friend was buying a home and the seller asked him to waive the appraisal contingency. Isn’t that a bad idea? That means he won’t know if he’s overpaying.”
Answer:
An appraisal is just an opinion, and usually a less accurate one than a good Realtor who knows the area.
I once listed a home for $520,000 and received five offers over list price and agreed on $535,000. Not uncommon in today’s market.
Then the bank’s appraiser said it was only worth $510,000.
…Really?
Did the appraiser know the value better than those five buyers—in other words better than the market itself?
I think not.
So, to answer your question: No, an appraisal will not tell you if you’re overpaying, or for that matter underpaying.
