Is Your Home’s Value in the Eye of the Appraiser or the Buyer?

Uncovering the Real Purpose of Appraisals and What They Mean for Buyers and Sellers

As a top-producing real estate agent in Sonoma County for the past 19 years, I’ve had extensive experience with appraisals, a critical part of the real estate transaction process. Over the years, I’ve observed an interesting trend: appraisers seem to justify contract prices more often than providing an entirely independent opinion of value.

First and foremost, it’s important to understand that appraisals are often required by lenders to satisfy their lending requirements. They are primarily a tool for the lender, ensuring that the property is worth the amount they are lending against it. While appraisals can offer insights to buyers and sellers, their primary purpose is to protect the lender’s investment rather than to serve as an independent valuation for the buyer or seller.

Here’s why I think this dynamic shapes the appraisal process. Appraisers are typically provided with a copy of the purchase contract before they evaluate the property. This means they already know the agreed-upon price before their assessment begins. While this information can offer useful context, I believe it inadvertently anchors their valuation process. Instead of forming an independent valuation, appraisers often seem to work backward, using the contract price as a baseline and finding comparable sales to support it.

In my experience, it’s rare for appraisals to deviate significantly from the agreed-upon price. This raises questions about how much of the appraisal process is truly independent. I’m not suggesting appraisers are doing anything unethical—most are highly skilled professionals. However, the system itself appears to encourage alignment with the contract price, which helps transactions proceed smoothly but might not always reflect the property’s actual market value.

For example, I once worked on a transaction where the agreed price was $950,000. The appraiser’s report, unsurprisingly, matched this figure, citing comparable sales as justification. However, my own market analysis suggested the home’s value was closer to $925,000. While the difference wasn’t drastic, it highlighted how appraisals often align closely with contract prices rather than presenting a completely independent valuation.

That’s why I always emphasize to buyers the importance of working with a real estate professional they trust to educate them on home values. If you’ve agreed on a price you’re comfortable paying, how much does the appraisal ultimately matter to you? An experienced agent can help you understand the market and determine whether the price aligns with the property’s value, giving you confidence in your decision.

Ultimately, success in real estate requires context, expertise, and market insights. After nearly two decades in Sonoma County’s real estate market, I’ve learned that appraisals are just one piece of the puzzle. Working with an experienced agent who understands the nuances of the local market—someone like myself—can make all the difference in navigating these complexities and making informed decisions.

Julianna Labra, REALTOR®

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