Appraisal Misconceptions Are More Common Than You Think
Let’s face it—real estate appraisals can feel mysterious if you’re not an appraiser. I’ve been doing this work for over 30 years, and I still run into smart, experienced professionals who have some appraisal misconceptions that lead them to misunderstand key parts of the appraisal process.
Whether you’re a real estate agent trying to price a listing, a homeowner selling or refinancing, an attorney handling a divorce or estate, or a loan officer guiding a borrower, appraisal misconceptions can slow things down, cause confusion, and even derail deals.
So today I thought I would help clear up some of the most common myths I hear—and explain what’s really going on behind the scenes.
1. Appraisers Rely Primarily on Price Per Square Foot
This is probably the most common misunderstanding I run into.
Yes, price per square foot is one of many tools we use to analyze value—but it’s not the whole story.
An appraiser doesn’t just take the size of the house and multiply it by a number. We consider the overall market, recent comparable sales, quality and condition, updates, functional layout, location influences, lot size, and more. Two homes similar in size may differ in value by tens of thousands of dollars because of these factors.
Bottom line? Price per square foot is just one puzzle piece—not the full picture.
2. Appraisals Are Just a Quick Comparison of Recent Sales
Some folks think appraisers pull the three most recent sales and call it a day.
In reality, it’s much more involved. We look at a wide range of comparable sales, analyze market trends, make adjustments for differences between properties, and apply professional judgment.
It’s not about picking the lowest or highest sales—it’s about finding the most similar properties and making market-based, well-supported conclusions. That takes time, data, and experience.
3. Appraisals and Home Inspections Are the Same
This is a big one for homeowners and buyers.
Home inspections focus on the condition and function of the property—things like the roof, HVAC, plumbing, and safety issues. The inspector is looking for problems.
Appraisals, on the other hand, are focused on value. We observe the overall condition, yes, but we don’t test systems or check for code compliance.
Think of it this way: the inspector tells you what’s wrong. The appraiser tells you what it’s worth in today’s market.
4. Automated Valuation Models (AVMs) Like Zillow Zestimates Are Equivalent to Appraisals
Zillow can be helpful for a ballpark estimate, but it’s not an appraisal.
AVMs use algorithms, public data, and sometimes outdated or incorrect info. They don’t know if your kitchen was remodeled last year or if the neighbor’s home was a distressed sale.
An appraisal involves a real person who visits the property, takes photos, measures it, and compares it to other similar homes in the area using professional standards.
Zestimates might be close—or they might be way off. I’ve seen both.
5. The Purpose of the Appraisal Changes the Value
This one trips people up sometimes.
They’ll ask, “What’s the value for a refinance?” or “How much is it worth for a divorce?” as if the answer changes depending on why we’re appraising it.
But value is based on market conditions, not the purpose. Whether it’s for a sale, a refinance, an estate, or a tax appeal, the market doesn’t care. The process might vary slightly, but the value conclusion is still based on the same data.
6. All Appraisers Are the Same
Not even close.
Like in any profession, there are different levels of training, experience, and quality. Some appraisers specialize in lender work only. Others (like me) also handle divorce cases, estate work, and tax appeals.
If you’re hiring an appraiser, make sure they’re qualified for your specific situation. And if local market knowledge matters—and it usually does—ask how familiar they are with your area.
7. Appraisals Are Only for Buyers
Buyers often rely on appraisals during the mortgage process, but they’re not the only ones who benefit.
Sellers use pre-listing appraisals to price their homes accurately. Attorneys use appraisals in divorce and estate cases. Accountants rely on appraisals for tax and financial planning. Executors use them to settle estates.
If you need to know what a property is worth—for any reason—an appraisal can give you clarity and peace of mind.
8. Appraisals Are Unnecessary for Cash Purchases
Just because there’s no lender involved doesn’t mean you should skip the appraisal.
Cash buyers are spending hundreds of thousands of dollars without a safety net. An independent appraisal helps confirm you’re not overpaying—and it can give you leverage if the seller is asking too much.
And if you’re selling to a cash buyer, an appraisal can help justify your asking price and give buyers more confidence in the deal.
9. Broker Price Opinions (BPOs) or Evaluations Are the Same as Appraisals
They’re not.
BPOs and evaluations are often done by agents or brokers. They can be helpful for listing decisions or internal bank use, but they’re not the same as a licensed appraisal.
Appraisals follow strict federal and state guidelines. They’re completed by licensed professionals, include a detailed report, and are accepted for legal and lending purposes. If you need something credible and defendable, get an appraisal.
10. Appraisers Always “Hit the Contract Price”
This is a popular myth in the real estate world.
While many appraisals do come in at the contract price, that’s not because we’re “trying” to make the deal work. It’s because the market data often supports the agreed-upon price.
But sometimes, it doesn’t. If the home is overpriced—or if the comps don’t support the contract—then the appraisal may come in low.
Appraisers don’t “make value.” We report it.
11. The Highest Price Means the Highest Value
Value and price aren’t always the same thing.
Let’s say two buyers get into a bidding war. The winner pays $25,000 over asking. Does that mean the home is “worth” that much more?
Not necessarily.
The appraiser looks at what similar homes have actually sold for, not just what someone is emotionally willing to pay. Competitive pricing can inflate sales, but appraisers have to ground value in actual market trends and comparable sales.
12. The Appraised Value Is Always Final
Appraisals can be challenged, with supporting information.
If you believe the appraiser missed something important, you can submit a Reconsideration of Value. This might include new sales, overlooked updates, or corrections to property data.
Appraisers aren’t perfect, and we’re open to reviewing solid evidence. But opinions need facts, not just opinions.
Final Thoughts
Appraisals don’t have to be mysterious. But if you’re working off the wrong assumptions, it can cost you—whether it’s time, money, or peace of mind.
That’s why it’s so important to understand how the process really works.
If you’ve believed any of these misconceptions, you’re not alone. These myths are common. But the more we all understand about appraisals, the smoother the real estate process becomes—for everyone involved.
Whether you’re listing a home, settling an estate, planning for divorce, or buying with cash, an accurate appraisal can be one of the best tools in your toolbox. If you have any questions not answered here, leave a comment below, and as always, thanks for reading.
Thorough list, Tom. I think one thing we are poised to see more ahead beyond just Zillow is, “But ChatGPT says…” I had one person share that with me so far. 🙂
That’s very interesting. I have not heard that yet, however, I can definitely see that happening.