Appraised value is not the same as every other value
A duplex appraisal is an independent professional opinion prepared for a defined purpose and date. A market estimate, automated value, asking price, contract price, and final sale price each answer a different question.
| Term | Meaning |
|---|---|
| Informational estimate | A non-appraisal opinion intended to help an owner understand a possible range |
| Automated valuation | A model-generated estimate based on available data and algorithms |
| Appraised value | An independent professional opinion for a specific assignment |
| Asking price | The price selected to market the property |
| Contract price | The negotiated price subject to contract terms |
| Sale price | The price recorded when the transaction closes |
What is different about a duplex appraisal?
Two-to-four-unit properties may require income and rent information in addition to the physical property analysis. Fannie Mae identifies Form 1025 as the Small Residential Income Property Appraisal Report for traditional appraisals of two-to-four-unit properties. The assignment, lender, property, and applicable standards determine the exact scope.
Why an appraisal and market estimate can differ
- They may use different effective dates or available sales.
- One may verify leases, expenses, permits, or condition more thoroughly.
- The appraisal may be prepared for lending, while a market estimate is prepared for a potential sale.
- Buyer competition, concessions, and contract terms may change after the effective date.
- Automated tools may classify a duplex incorrectly or lack complete rent data.
When an appraisal may be needed
Lenders commonly order appraisals for purchase or refinance decisions. Appraisals may also be relevant to estates, disputes, tax matters, or other situations where an independent professional opinion is required. The appropriate professional and scope depend on the purpose.
A complimentary Duplex Values review is informational. It is not represented as a licensed appraisal and should not be substituted when a formal appraisal is required.
Authoritative references
The Consumer Financial Protection Bureau describes an appraisal as an independent assessment and a written opinion of what a property is worth. See CFPB appraisal guidance. See also Fannie Mae appraisal report forms.