Appraised Value

Appraised value is the number a licensed appraiser arrives at after completing a formal appraisal of a property. It's the output of the appraisal process: the appraiser's professional opinion of value as of a specific date and for a specific purpose.

It helps to understand how appraised value relates to similar concepts:

The appraisal is the process: the property visit, the comparable sales analysis, and the formal report prepared by a state-licensed professional.

The appraised value is the conclusion of that process, the number the appraiser determines.

Market value is a broader concept, an estimate of what a property may command in the current market. A CMA estimates market value. An appraisal also estimates market value, using a formal process with defined standards. The two often reach similar conclusions, but they serve different purposes and aren't interchangeable.

Tax assessed value is different from both. It's assigned by a government assessor for property tax purposes, using separate methods, and typically doesn't directly track current market conditions.

For a full comparison of these four value concepts, see How Much Is My House Worth? Understanding Home Value.

Appraised value matters most in financed transactions. When a buyer is borrowing money to purchase a home, the lender typically requires a formal appraisal. The lender uses the appraised value to determine how much they're willing to lend, generally based on the lesser of the purchase price or the appraised value.

If the appraised value comes in below the agreed purchase price, a gap emerges between what the buyer and seller agreed to and what the lender will finance. That gap needs to be resolved through renegotiation, additional buyer funds, or in some cases the transaction adjusting or not proceeding.

For sellers, understanding that a well-supported list price, based on current comparable sales, tends to produce appraisals that are consistent with the agreed price is a useful insight. Pricing significantly above what the market evidence supports increases the risk of an appraisal shortfall later in the transaction.

A buyer and seller agree on a purchase price of $380,000. The buyer's lender orders an appraisal. The appraiser reviews the home and comparable sales and concludes the appraised value is $372,000. There's now an $8,000 gap between the appraised value and the purchase price (an appraisal gap) that both parties need to resolve before the transaction can close.

"The appraisal automatically determines what my house is worth on the market."

An appraiser's opinion of value is professional and well-informed, but it's one estimate at a specific point in time, not an absolute market declaration. Two appraisers reviewing the same property can reach different conclusions based on their comparable selection, adjustments, and judgment. An appraised value reflects a defined process conducted for a specific purpose, most often supporting a lender's underwriting decision. It's highly relevant information, but it's not the only measure of a home's market value.