Shortchanged by Shortcuts? price. Operating as if the appraised value is the “truth” might be a function of the way you think about monetary value. Many people look for authorities to determine the truth (about lots of things, not just money). Could this be because their view is authorities look like (are representative of) someone who knows something they don’t? You’ll be best deciding for yourself what your next home is worth.
Avoid Being Shortghanged: Shortcuts to Watch For • Representativeness/Anchoring: Because the appraisal is obtained from a bank doesn’t make it the truth. It’s still a subjective valuation of the house’s potential resale amount. Don’t get anchored to thinking it’s the “true” value.
Points to Remember • As the buyer, you’re also responsible for scheduling and paying for the appraisal. The appraisal is in place to protect the lender, confirming how much the lender might expect to get for the property if they had to resell it. • The lender won’t approve a loan for more than the appraised value. • In a buyer’s market, you’ll have the opportunity to ask the seller to lower the price to match the appraised amount or otherwise negotiate how the seller might make up the shortfall. • In a seller’s market, you’ll likely have to make up the difference. • In a very competitive market, you might need to waive the piece of your finance contingency that protects you from low appraisal to remain competitive. Appraisals | 131
