If you look up appraisal and valuation in the dictionary, they will come up as synonyms, but there is a huge difference between those words when it comes to real estate.
Realtors often offer people “free appraisals” of their property but as good as it sounds, those appraisals are inaccurate (to say the least). What the estate agents are really doing is applying their knowledge of local market to try and predict what that property can be sold for. Why do they call it an appraisal? Because they are not professional valuers and it’s illegal for them to use the word “valuation”.
Why shouldn’t people blindly believe those appraisals, after all who knows the prices better than the local real-estate agent? Because in many cases estate agents have their own agenda in mind – so they can give a higher appraisal to attract people and to influence their decision to sell the property through that particular real estate agency.
A formal valuation is always backed up by the valuer’s education, training and experience, and is taking into account the features of the house, its condition, zoning and location, as well as the local sales data. Valuations are unbiased, definitive values that have a legal standing – whereas appraisals are to be used only as a guide, and even then taken with a grain of salt.
Have you ever been misled by an agent’s appraisal?