When you’re buying a home, understanding the difference between appraised value and market value is essential. These two numbers often don’t match — and that can affect your mortgage and your budget.
What Is Appraised Value?
The appraised value is an estimate of a property’s worth, given by a licensed appraiser. This value is based on objective criteria, such as:
- The home’s condition and features
- Sales of similar properties nearby
- Current housing market trends
- The property’s location
Appraisers use data and guidelines to stay neutral and avoid emotional or personal influence.
What Is Market Value?
Market value is how much a buyer is willing to pay for a home in the current market. It’s influenced by factors such as:
- Supply and demand
- Local economic conditions
- What buyers are looking for right now (e.g., home offices or extra space)
- How desirable the property feels to potential buyers
Because market value reflects what people are willing to pay, it can be higher or lower than the appraised value.
When Appraised and Market Values Don’t Match
Let’s say you’re ready to buy a home listed at $300,000. You offer $320,000 because it feels right for you and you don’t want to miss out. But the appraisal comes in at $290,000.
In this case, your lender will likely base your loan on the appraised value — not what you offered. That could leave you responsible for covering the $30,000 difference out of pocket.
What Are Your Options?
If the appraisal comes in lower than your offer, you can:
- Negotiate with the seller to lower the price
- Challenge the appraisal with new information
- Pay the difference in cash
- Walk away from the deal
Each option has pros and cons. A conversation with your mortgage broker can help you decide what’s best for your situation.
Why This Matters Today
Right now, market conditions are shifting. Interest rates remain relatively stable, and more inventory is becoming available in many areas. That makes it a good time to consider buying a home, especially if you understand how to work with both appraised and market value during the process.
Final Thoughts
Understanding how appraised and market value work together helps you make smarter financial decisions. It also helps you stay prepared if unexpected numbers show up in the homebuying process.
If you're thinking about buying a home, I’m here to help guide you through every step — including how to handle the appraisal process. Let’s connect today and explore your options.
Ready to buy a home? Let’s talk about how to make your mortgage work for you — contact me today for a free consultation.