Are appraisals based on science or more of an art form? Whether an appraisal is an art or a science is debatable. Most people assume that it is a science, but is it? You can put five very experienced and qualified appraisers in a room with the same information and come up with five different values. And guess what? They can all be right. It is an opinion of value. In my opinion, appraisals are more of an art than a science. I’m not discounting the science of developing an appraisal. We definitely need guidelines and standards to prepare appraisals, but we should never think that an appraisal is an exact science.
Some appraisers do not realize the importance of buyers and sellers establishing market values. They might rely on historical data and apply to establishing current market values. If you add current listings and marketing, the market value becomes more reliable. Listing prices lower than the current market prices paid might indicate a declining market and vice versa. If the property is under contract, the contract should be considered as market evidence. Today’s contract can become tomorrow’s sale. In fact, the definition of market value outlines the importance of informed buyers and sellers. Market value is defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
(1) Buyer and seller are typically motivated;
(2) Both parties are well informed or well advised, and acting in what they consider their own best interests;
(3) A reasonable time is allowed for exposure in the open market;
(4) Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
(5) The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Appraisals are more an art than a science. Although there is no exact value, most appraisers would provide a reasonable range of value indications given the same market evidence. Appraisers interpret market data to determine market value. Market participants (buyers and sellers) establish market value.
If you are interested in buying a new home or any other home, please contact me (Alan Lane with Keller Williams Realty at 2119 W Brandon Blvd, Brandon, Florida 33511) and I can help you find a new home in the Tampa Bay Area. I can also sell your existing home. My email address is firstname.lastname@example.org or call me at 813.205.9280. If you are just starting your search, you can search the MLS for homes on my website at real estate search link.
 12 C.F.R. Part 34.42(g); 55 Federal Register 34696, August 24,1990, as amended at 57 Federal Register 12202, April 9, 1992; 59 Federal Register 29499, June 7, 1994.
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