Because appraisals look at homes sold in the past and don't take into account future prices, appraisals are usually lower than the selling price. It would be like setting the price of a tank of gas based on what was paid yesterday and not on current market conditions. You can pay for a second appraisal on your own, but there's no guarantee that your lender will exclude it. That said, you can expect your appraiser to analyze the value of comparable homes as part of your decision-making.
Each appraiser will take a different approach when inspecting your home and, at the same time, will analyze the value of other homes as part of their decision-making process. However, as a potential home seller, you ultimately decide to consider what you think the market value of your home should be. The buyer's lender uses the value appraised during the escrow to ensure that the home is actually worth the amount of the loan they are taking out. Licensed appraisers must complete 150 hours of state-regulated education, 1000 hours of fieldwork, and ongoing training after obtaining the license (hours may vary by state and credentials).
That's why many sellers prefer to use a CMA performed by an experienced real estate professional who understands the dynamics of the local market and knows what buyers in their area want. In general, real estate agents conduct a market analysis and compare a home with other homes that have recently been sold or listed for a competitive price. To determine their valuation, they usually perform a home appraisal, in which they evaluate the condition and characteristics of the home. Rather, the market value of a property is decided by buyers, who value real estate based on what they believe the price of a property should be and, more importantly, what they are willing to pay for it.
Compared to fair market value, the appraised value is a more personalized and objective estimate of the value of your home. Instead, a tax appraisal refers to the value that a government tax appraiser has assigned to your property. The market value of a property is more subjective with respect to what the average buyer is willing to pay for a home and may fluctuate depending on the market at a specific time, while the appraised value is objective, determined by a third party and is not so easily changed. Most homeowners want the assessed value of their property to be higher than the assessed value due to tax implications.
This is a common scenario in seller's markets, where overwhelming demand can drive up home sales prices. In effect, an appraisal is a valuation of a property that is determined based on the recent selling prices of properties in your area and other decisive factors.