Appraised Value
Appraised value is the dollar amount that a licensed appraiser determines a property is worth based on their professional analysis of the property's characteristics, condition, and comparison to recent sales of similar properties. This value represents the appraiser's opinion of what a willing buyer would pay a willing seller in an arm's length transaction.
Example
“The appraised value came in at $380,000, which was $20,000 less than the agreed purchase price, forcing a renegotiation.”
Memory Tip
Appraised value is what the 'A+ Professional' says it's worth, not what you hope or think it's worth.
Why It Matters
The appraised value directly affects how much money lenders will loan, as most lenders will only finance a percentage of the appraised value, potentially requiring buyers to bring more cash if the appraisal is lower than the purchase price.
Common Misconception
Many buyers assume that the appraised value will automatically equal their offer price.
In Practice
Tom offered $350,000 for a house but the appraised value came in at $340,000, meaning his lender would only approve a loan based on the lower amount, requiring him to bring an additional $10,000 in cash to closing or renegotiate the price.
Etymology
This term evolved from the medieval practice of having official 'praisers' set values on property for tax collection purposes.
Common Misspellings
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