WHAT IS AN APPRAISAL?

An appraisal is an opinion of value by a disinterested party.  It is not a determination of value or limitation of value.  It is quite possible for a buyer or seller to negotiate a price that is higher or lower than the value opinion herein.  An appraisal is an opinion, not a fact.

In some markets, sellers may face a significant increase in direct competition from other sellers who are also trying to sell their properties.  This tends to push prices down.  In other markets, buyers may see a shortage of options (listings) and may have to compete for the few properties that are for sale, which pushes prices up.  The supply of options and number of buyers changes from day to day in many markets.  It is impossible to predict when buyers and sellers will come into a market which makes it difficult to track those variables.  This is one reason why prices can be higher on one day and lower the next.

Real estate is unique since the location of one property is never the same as another and is difficult to recreate more units in a timely way.  When the market absorbs all the supply of a product, the producers normally increase production to compensate.  In real estate, the time necessary to build new homes is rated as months not days.  The inability to add supply quickly makes real estate more volatile.  A temporary shortage of inventory will cause prices to spike.

Some properties are very similar to other nearby properties, e.g. housing in suburban platted subdivisions or condominium units but others are more or less unique, e.g. houses on 30 acres, log homes, earth-bermed housing, or dome houses. By definition, the more unique the property, the fewer comparable properties will be found.  Many times, this will cause appraisals to be more subjective and less objective.  An appraisal is an opinion, not a fact.

The opinions herein are the result of an effort to replicate typical buyer thinking and behavior by researching the actions of typical buyers and sellers in previous markets.  There are some facts in this analysis that are used to develop an opinion, but opinion of value is also impacted by the amount, comparability, and reliability of the data found.  In some appraisals, the data is plentiful, reliable, and relevant but in others is not comparable, not reliable, and not plentiful.  This is an imperfect process; an appraisal is an opinion, not a fact.