The definition of "property appraisal" from Investor Words: A professional opinion, usually written, of the market value of a property, such as a home, business, or other asset whose market price is not easily determined.
Suppose Zsa Zsa Gabor comes upon hard times and must sell her diamond ring. She goes to the jeweler she has used for a century (sorry, Zsa Zsa). He writes her up an appraisal on his letterhead that he'll stake his reputation that Zsa Zsa's ring is worth one million dollars. However, surprise of surprises, he won't buy the ring from Ms. Gabor at any price. Poor old Zsa Zsa needs some money so she slinks off to a pawn broker in Beverly Hills. After examining the ring, he offers her $400,000. Zsa Zsa is appalled. Her jeweler to the Stars of world renown reputation has given her in writing on his official letterhead his professional assurance that her ring is worth one million dollars. The pawn shop owner will give her $400,000 because that's all it's worth to him. But, she stammers, you'll be able to shine it up and put it in a nice display box and sell it for much more when the economy comes back and I'll have lost so much. Not, he says, if you don't sell it to me. It can remain in your possession, worth one million dollars...or you can sell it to me for $400,000 because that's all it's worth to me.
It's the same with an appraisal on a house. Just because a homeowner pays an appraiser for his opinion before listing their home, it has no relation whatsoever to what a buyer will offer or ultimately pay for your property. Don't use an appraisal in an attempt to hit a buyer over the head with what you've paid your own private appraiser to opine about your property's value. When an offer is made and accepted on your home in today's market, the purchaser's loan company will call a neutral, third-party appraisal company to independently evaluate your property for the lender - not for the seller or the borrower, but for the entity lending the money on the loan. If you think that you have an appraisal for $100,000 on a property and the independent appraiser advises the bank that his opinion regarding the value of the home is $95,000 that your appraisal is the controlling appraisal because it is not. The controlling appraisal is the independent appraisal and even if your personal appraisal is faxed off to the lender in protest, it will go where it belongs - in the trash. Save yourself the cash. A market appraisal can be a useful tool when trying to estimate an unusual or multi-million dollar property or an exceptionally unique property and I would recommend it as a guideline, but not the final word. As we all know, anything is only worth what a buyer is willing to pay and in the case of a home loan, what the lender is willing to lend and under their terms and with an independent opinion.
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