Appraisal Profession, Appraising, Cleveland Area, Helpful for FSBO, Helpful to Homeowners, Market Activity

Who Needs Appraiser’s When One Has Cash?

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Who needs an appraiser when one has cash? That’s a question a good friend asked me after telling me that a home on the same street from them sold, in hours, for a much higher price than many other generally similar homes are selling for in the neighborhood. The buyers paid cash. I must admit, in the past year, there have been times when I have felt like many buyers don’t really care about value anymore.

It reminds me of a song by Chicago, one of my all-time favorite bands, where the lyrics ask “Does anybody really know what time it is, does anybody care about time…” Today, it’s more like, “Does anybody really know how valuable this property is, does anybody really care…”

Before we continue, please treat yourself to this video of an awesome Chicago tribute band out of Russia called Leonid & Friends. They are amazing, if you like Chicago!



I hope you enjoyed that musical interlude! Back to the topic at hand.

While it may seem like many buyers don’t care about what the market value of a home is, I think that we must be careful to not make that assumption. There is a lot of information that an appraisal can provide, which can be helpful to lenders and homeowners.

It is important to note that if an appraiser is hired by a bank to perform an appraisal of a property, the appraiser’s client is the bank, and their legal duty is to the bank, not the borrower.  However, anyone can hire an appraiser to appraise a home.  If a homeowner hires the appraiser to appraise a home, the appraiser’s legal duty is to the homeowner, since they are the ones who hired the appraiser. 

Appraisals provide information that can be helpful to the lender, and the buyer, in deciding about buying a home. Let’s talk about some ways that an appraisal can help.


While some may be willing to spend more than market value on a home, in many cases, there is a threshold to the amount a buyer is willing to spend on a home. So, having a well-developed and supportable opinion of value is important. Right now, in many contracts, buyers state that they will not pay more than a certain about over the appraised value of a home. It’s a financial calculation on the part of the buyer. Some savvy buyers have done their homework and know what competing homes are selling for in the neighborhood. However, they have agreed to a higher price due to being in a bidding war and wanting to win the bid. Their hope is that the home does not appraise way over what they know other competing homes are really selling for.

Clearly lenders are not the only ones who want a reliable and truly supportable opinion of value. Many buyers are banking on appraiser’s doing good work. Imagine if the appraiser just magically hit the contract price when there was really no support for doing so. Perhaps the appraiser felt like they were making everyone happy, when, they were doing everyone a disservice. On the other hand, if an appraiser’s opinion is lower than the contract price due to a lack of due diligence on the part of the appraiser, that also does everyone a disservice.

Recently I have seen a handful of reports that have come across my desk, and not for review. (I don’t do review work anymore) I always like to see what other appraisers are doing in my area. Sadly, none of them were making market adjustments to reflect the rapid changes in price that were taking place. I know the prices in these neighborhoods were increasing because I had just appraised other homes in the same neighborhoods recently. It makes me wonder if the appraisers were not trained on how to make a proper market analysis, or just don’t care. Perhaps they’ve adopted the attitude that no one really cares about what the appraiser’s opinion of value is, so why bother.  Oh, I hope that is not the case! Therefore, many knowledgeable appraisers are speaking about the importance of appraisers really understanding how to analyze the markets they appraise in. Now more than ever! There is no excuse.

Speaking of market trends, the market analysis in an appraisal provides valuable information that many find helpful. How so?



Right now, in many neighborhoods across the country, including in my area, home prices are increasing rapidly. However, there are some neighborhoods, few though they are, in which property prices are stable or even in decline, despite there being a shortage of home inventory. Some of these areas have been hot for years, but appearing to be maxing out, despite the housing shortage.

One area in which sales prices are in decline, appears to be due, in part, to higher tax rates, which appear to have impacted prices of larger homes in this one neighborhood. However, in the same neighborhood, sales prices of smaller more affordable homes are stable.

In some neighborhoods, homes in certain segments are appreciating over twenty percent annually. Not adjusting for these market changes will lead to a less than supportable opinion of value. For instance, if a $200,000 home is appreciating at an annual rate of 15%, and if it sold six months ago with no time adjustment being applied, the appraisal could be significantly lower that what is supportable in the market.

Speaking of home price appreciation, what if a buyer is renting a home and would like to purchase a home? However, to do so, they are going to have to pay more than market value to win the bid on a home they want to purchase. If they know what competing home prices are appreciating at, they may feel more comfortable over-paying for a home, than wasting another year paying rent. In their mind, they may calculate that its worth paying more than the market value of the home, with the hopes that things will continue to appreciate, even if the rates of appreciation level off at some point. They would rather build equity in a home they own than to pay rent. 

However, would a buyer be willing to pay more than market value on a home, if home prices were depreciating?

A word of caution about changes in the market. No one knows what the housing market will do in the future. So, betting on continued rapid price appreciation may pay off. But that’s not a guarantee. It is a gamble. There’s some speculation going on. Rapid appreciation could continue for years but may not. We will have to wait and see.

Interestingly, this year I have had numerous homeowners hire me to appraise their homes, just because they wanted to see how much their home has appreciated since they purchased it for several years ago. Several of them told me that they were as interested in knowing the rate of appreciation as they were the value of their home. One of my clients hired me to appraise their home to help them to decide if it was worth applying for a loan at a bank. They wanted to know if they had enough equity to make it worth taking out a new loan. They knew that if they applied for a loan with the bank, the bank would have their own appraiser appraise the home. However, the homeowner wanted their own independent appraisal completed first. 

There are a lot of people that value the opinion of a qualified appraiser. 


When I appraise a home, I measure it, if the scope of my work involves physically inspecting the home, which it normally does. Fairly often, when there is a value issue, a common reason is the gross living area. Often, what is reported in the multiple listing service (MLS) or public records is incorrect. So, just having an accurate idea of the size of a home is a valuable piece of information.

If a home is one hundred square feet larger than what the public records reflect, and the market is paying say, eighty dollars per square foot for gross living area, that’s an $8,000 price difference. An appraisal should reflect what the appraiser has measured the home to have in terms of square footage. That’s an important piece of information that an appraisal offers.

As discussed earlier, home size and the type of property also matter when it comes to value and market trends. Sometimes, the rate of price change is different for larger homes than smaller homes. Larger luxury homes often have a more limited set of potential buyers, which can affect the rate of price change, in comparison to smaller homes with a larger pool of potential buyers.

Single-family homes often appreciate at different rates than condominiums and multi-family properties. That’s because they appeal to different segments of the market. All these different types of homes usually have different rates of price change. But a buyer wouldn’t necessarily know that, or how to measure that. A good appraiser can and will measure these differences.

So, in this crazy market, while some buyers with cash may not care about how much over market value they may pay, I believe that most buyers do care. Just because they are willing to pay more than the home appraises for, is not an indication that they don’t care about the market value of the home.

A well-developed appraisal report will provide a lot of useful information to the appraiser’s client, whoever their client may be. The appraiser’s opinion of value is just one piece of information. There’s a lot of useful analysis behind that opinion. A good appraisal should state more than just the obvious. A good report will clearly explain why and how the appraiser came to the opinion that they did.

If the lender says that someone qualifies for an appraisal waiver, I highly recommend that they still hire an appraiser to appraise the home before they buy it. The information we just went over can be very helpful to the buyer.    

To end this week’s post, I leave you with one more Chicago song from the Leonid & Friends Tribute Band. I picked this one because you all inspire me to keep writing!

Thanks so much for your support. I appreciate you all!



Have a great long weekend everyone!



If you enjoy listening to podcasts, check my new podcast out. I hope you enjoy it! You can find me on Apple Podcast, iHeart Radio, Spotify, Google Play Music, Sound Cloud,, RadioPublic, Deezer, Breaker, Stitcher as well as other feeds. 

You can also listen right here at Cleveland Appraisal Blog!

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If you are interested in stats, and nothing but the stats, for neighborhoods in Northeast Ohio, check out my other podcast. In it, I provide short episodes that provide you with stats on median sales prices, marketing times, housing inventory and other related stats, on specific neighborhoods in Northeast Ohio. You can find me on Apple Podcast, Spotify, Google Play Music, Breaker, Overcast, Pocket Casts, Radio Public or you can listen right here at the Cleveland Appraisal Blog.


I am a member of the National Association of Appraisers. If you’re an appraiser, and you’re looking to join an appraisal organization, please check them out. The NAA is made up of fantastic appraisers from across the country who are working hard to keep their fellow appraisers up to date on what’s happening.

Click here to visit their website.


Here are some links to other articles I’ve enjoyed recently! I hope you will also… 

Contorted Housing Numbers Can Sound Impressive- Housing Notes by Jonathan Miller

An open letter to home sellers in a crazy marketSacramento Appraisal Blog

Is The Entire Birmingham Real Estate Market Hot? – Birmingham Appraisal Blog

What Should Appraisers Wear?- APPRAISAL TODAY

Is Market Value Obvious? – George Dell’s Analogue Blog

May Newsletter – Rural Counties Surge – DW Slater Company Blog

Is It Time for a Time Adjustment? – Real Estate Between The Lines (PODCAST)

4 thoughts on “Who Needs Appraiser’s When One Has Cash?”

  1. I’ve felt that too where people just don’t care as much right now about value. I’ve had agent friends echo that sentiment also. This is surely a symptom of very lopsided market conditions. Though if the product being provided has issues too as you mentioned, that doesn’t help. The role appraisers play is theoretically very important.

    1. Yes indeed! Like every thing else, and as you’ve mentioned many times, markets are always changing. I always learn the most during extreme market cycles, both up and down. It’s interesting to watch how different market participants react. There’s a lot to think about in the current market.

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