Appraised value is the property's value conclusion as stated in the appraisal report.
Appraised value is the property’s value conclusion as stated in the appraisal report.
Appraised value matters because it is one of the key numbers the lender uses when deciding how much leverage the property can support. If the appraised value comes in below expectations, the financing structure may need to change.
It also matters because borrowers often assume the contract price automatically becomes the value lenders will use. That is not always true. The lender is generally focused on supported value, not just negotiated price.
Borrowers encounter appraised value after the appraisal is completed and the file moves deeper into underwriting.
The number becomes especially important before Closing because it can affect Loan-to-Value Ratio (LTV), pricing, and whether a transaction needs to be renegotiated.
A home goes under contract for $500,000, but the appraised value comes in at $485,000. The lender may base leverage calculations on the lower supported value rather than the higher contract price.
Appraised value differs from Market Value because market value is the broader economic concept of what the property would likely sell for, while appraised value is the appraiser’s concluded figure in the report.
It also differs from Assessed Value, which is used mainly for property-tax purposes rather than mortgage underwriting.