Appraisals are not perfect. They are not without bias. They may not even be an accurate predictor of market price. But most buyers and sellers will deal with them.

Appraisals are primarily triggered by a mortgage application; lenders will typically request an appraisal to help evaluate their risk. This is a significant reason that cash buyers may have a competitive edge over buyers who are financing – a cash sale does not require the appraisal. That being said, as part of contract negotiations, a cash buyer MAY waive that advantage and insist on an appraisal with the opportunity to cancel a contract if the home does not appraise for the full purchase price.

Sometimes, sellers of uniquely upgraded homes or homes that are so new that there simply are not similar homes that have moved through the PebbleCreek resale market will elect to get an appraisal as part of the pre-marketing process. An appraisal at that point can offer insight in to pricing but an appraised price is not necessarily a market price; it is not unusual to see PebbleCreek homes with relatively high appraisals marketed for sale “under appraised price.”

Similarly, especially with newer resale homes that are competing with PebbleCreek new construction for buyers, it would not be unusual for the appraised price to come in lower than the market price. For the most part, appraisers do not consider new construction pricing – even though a buyer most certainly does.

Appraisers are human beings who are constrained by the rules of their trade. And their trade is valuable – no doubt about it. It is simply important to remember, whether an appraisal comes in high, low, or right on the contract price is just one indicator of market value. At the end of the day, the only thing that really determines resale home price is agreement between one buyer and one seller. And that agreement is influenced by many things: closing date, competitive offers, cash vs mortgage transaction among them.