Appraisals can be somewhat subjective, so two appraisers can value the same property differently. Several factors, such as timing, purpose of the valuation and the comparable sales selected by the appraiser, can lead to disparities. Here are some things to consider as you try to understand different opinions of value:
1. Subjectivity in Valuation Methods: Appraisers may interpret data and market conditions differently. Their judgments on comparable sales, property features and condition can vary.
2. Different Approaches: Appraisers might use different methods for valuation, such as the cost approach, sales comparison approach or income approach, leading to different estimates.
3. Market Conditions: If the market is fluctuating, appraisers might have different opinions on current demand or future trends, impacting their valuations.
4. Data Sources: They may rely on different data sources or have access to varying levels of information about comparable properties, which can influence their assessments.
5. Assumptions: Each appraiser may have different assumptions about factors like zoning, future development potential or even economic indicators.
6. Experience and Expertise: An appraiser’s background, including their experience in the specific market or type of property, can lead to different evaluations.
7. Emphasis on Unique Features: Appraisers may place different levels of importance on unique features of a property, such as location, layout or amenities, leading to differing assessments of value.
As experienced real estate agents, we often work to try to point out to appraisers any potential landmines in comparable sales when we are aware of them. For example, if there is a recent comparable sale that is anomaly (either substantially higher or lower than most of the other comps) and we know the reason for that (e.g. there were extenuating circumstances that may not be readily apparent, such as a large development that was recently approved next door that will block their windows), then we will want to make sure the appraiser has that information as well.
As your agents, we are here to help guide you and serve as a resource. Do not hesitate to reach out with any questions throughout the buying or selling process.