Sellers often require appraisals to ascertain a fair asking price, and buyers seek appraisals for the peace of mind of knowing they are not paying too much for a property. These are referred to as sales advisory appraisals.
Some items of property do not require appraisals since identical comparable items are commonly sold and records of sale prices are public knowledge. Examples include commodities, publicly traded securities, and new mass-produced goods such as kitchen appliances. In such cases, buyer and sellers can determine a fair asking price by themselves without the assistance of an appraiser.
But for items for which sales data for comparable properties are not readily available or for which understanding the relevant marketplace or the value-relevant characteristics of the property involved is a complex matter, an appraisal can act as a guide for sellers. By the same token, an appraisal can serve to give a potential purchaser the peace of mind that the price he or she intends to pay is within reason.
When valuing property in connection with an anticipated purchase or sale, the appraiser determines the item’s market value. Selling at market value ensures that the seller gets full value, and that the buyer does not pay more or less than the property is worth. Remember, though, that market value assumes an allowance for reasonable exposure time and this might vary as the conditions of sale vary. For instance, if the seller is anxious to sell, the property’s value (given the limited time to expose the property to an open market) will be lower than the value would be for a scenario to which adequate time to market the property was available.