Yes. An appraisal is an opinion, not scientific fact. The appraiser uses facts (cost data and market sales) to arrive at the appraiser’s opinion of value, but could arrive at different values. The more unique the property and the fewer the comparable sales available to the appraisers, the more subjective the appraisal can be. Also, if a house is located on a busy street, one appraiser may say the best use is residential (though less attractive to the general public) while another might say the best use is for commercial use such as a small office.
The appraisal should be completed under the highest and best use of the property, which means:
- Is the use legally permissible (will zoning allow a commercial use in a residential neighborhood)?
- Is the use financially feasible (will I get enough rent out of the building to make a profit)?
- Is the use physically possible (will a commercial building and adequate parking fit on a small residential lot)?
- What use will be the most productive (a single family home on a busy highway with a large lot may rent for $500/month but if the property was used as a office it would rent for $1,000/month)?
The real estate market is not a perfect market. Buyers and sellers are often motivated by emotion, which result in ranging sales prices. Two similar 3 bedroom ranch homes on the same street sell for $100,000 and the other for $105,000. Both are very similar with minimal differences. Market value is really more a range than an exact value. For instance, the above two houses sold for $100,000 and $105,000 while a third sold for $107,000. The three similar sales would indicate a range of value from $100,000 to $107,000. However, the appraisal forms require a specific value such as $105,000 though the potential value could be somewhat less or more that the reported value of $105,000.