Both the responses here answered you - that it is based on selling price. When there aren't any homes similar enough to the property being appraised, the appraiser will take the closest comparable home and either add or subtract the price based on features found in the various homes. For example, if a home sold for $150,000 with no garage and the one being appraised has a garage, the appraiser will take the $150,000 and add the price of a garage to it to come up with the appraised value. Likewise, if the home with the garage sold for $150,000 and the home being appraised does not have a garage, the price will be less than $150,000. The appraiser must do this for various differences between the homes he/she picked as comparables. The differences must be things that increase/decrease the value of a home - not like window treatments or a pool or other differences that have no impact on price.

Just my additional two cents. Real estate agents are only allowed to give you a price range of what you should be able to get for the property whereas the appraiser are licensed to give you an exact amount. The are specifical trained to to make the proper price adjustments compared to the other properties.

But in essence, they both compare sold properties to come up with a value.

Hope that helps,

Terrence Charest, e-Pro

Appraisals are based on homes sold. A seller can ask anything for their home, but when it comes down to a buyer getting a mortgage, the lender sends an appraiser out to evaluate the home. He then takes that information and compares it with similar homes that have sold in the neighborhood in the last 6 months. If the agreed upon price is more then the appraisal, the buyer can walk away from the deal with their deposit. Or the deal needs to be renegotiated. I'm sure that covers your question, but, I could go into why it is not a good idea for a seller to overprice their home. If you are interested in more information, feel free to contact me. Thanks, Kathleen

Home appraisals should be based on homes that are comparable in size, neighborhood, and amenities that have sold in the last 3-6 months. Listing prices should not be a factor on appraised values.