Skipping a Home Appraisal Could Cost You ThousandsWhen a home buyer skipped the appraisal and relied on an AVM, the outcome was a disaster. Learn why expert insight is worth it. Steve Leavitt May 8, 2026 
Is saving a few hundred dollars on a home appraisal worth the risk when you're making a $400,000 real estate decision? Here's one real-world transaction that shows why I believe buyers - especially cash buyers and real estate investors - should think carefully before relying solely on an automated home value. This house sold on March 15, 2019, for $400,000 in an all-cash sale to a Realtor/investor. No appraisal was conducted. Instead of paying approximately $400 for a professional appraiser to provide a supported opinion of value, the buyer relied on an AVM (automated valuation model) to help determine whether the asking price was reasonable. What happened next is interesting. From a $400,000 Purchase to a $365,000 ContractJust nine days after purchasing the property, the Realtor listed the home for sale for the same $400,000 purchase price.
In approximately one month, the market provided some pretty strong feedback about that original $400,000 purchase price. When the property was appraised for the subsequent sale, the appraised value was $368,000. The $400 Appraisal That Wasn't OrderedThe buyer saved approximately $400 by not ordering an appraisal before making the cash purchase. But the property was under contract a month later for $35,000 less than the original purchase price. Would an appraisal have prevented the buyer from paying $400,000? There's no way to know for certain. An appraisal is an opinion of value, and no appraiser can guarantee what a buyer will ultimately pay or what a property will sell for in the future. But this is exactly why, in my opinion, saving a few hundred dollars shouldn't be the primary consideration when you're making a real estate decision involving hundreds of thousands of dollars. A professional appraisal would have given this buyer something the AVM couldn't: an independent appraiser analyzing the specific property, selecting relevant comparable sales, reviewing local market conditions, and developing a supported opinion of value. An AVM Is a Tool, Not a Home AppraisalAutomated valuation models can be useful. They can provide a quick estimate of a property's potential value using available real estate data. But I wouldn't rely solely on an AVM to make a major real estate investment. An AVM doesn't physically inspect the property. It may not fully recognize differences in condition, quality, renovations, location influences, views, lot characteristics, functional issues, or other features that can affect how buyers respond to a particular home. An appraiser does more than pull a number from recent sales. We analyze which properties are actually comparable and how differences between those properties may influence value. If you're wondering why automated estimates and professional appraisals can produce different results, read more about AVMs and the accuracy of computer-generated home valuations. Cash Buyers Don't Have a Lender Looking Over Their ShoulderThere's another important lesson in this particular sale. It was an all-cash transaction. When you finance a home, the lender will typically require an appraisal to help determine whether the property provides adequate collateral for the loan. A cash buyer doesn't have that requirement. That gives you more freedom - but it also means the decision about whether to obtain an independent appraisal is yours. Just because nobody requires an appraisal doesn't mean there isn't value in getting one. If you're buying a home with cash, purchasing an investment property, or making another real estate decision without a lender involved, you can order your own independent home appraisal before making your decision. Real Estate Investors Should Look Beyond the Purchase PriceThis is particularly important for investors. Whether you're buying a property to flip, hold as a rental, or resell quickly, your numbers depend heavily on the assumptions you make before purchasing.
An incorrect assumption about value can affect your entire investment calculation. For more information, read about using a private appraisal when purchasing a flip or rental property. My Take After More Than 30 Years as an AppraiserI've been appraising residential real estate for more than 30 years, and this transaction is a good example of why I believe it's important to consider what's actually at stake. I'm not suggesting that every AVM is wrong or that every real estate purchase requires a private appraisal. But if you're preparing to spend $400,000 on a property and the only thing standing between an automated estimate and an independent professional opinion of value is a few hundred dollars, I believe an appraisal is worth serious consideration. In this example, the buyer saved approximately $400 by skipping the appraisal. Within a month, the property was under contract for $35,000 less than the buyer had paid, and the subsequent appraisal indicated a value of $368,000. That's a significant difference. Sometimes the important question isn't "How much will an appraisal cost me?" It's "How much could I be risking without one?" Need a Home Appraisal in Phoenix, AZ?If you're making an important real estate decision and want an independent opinion of what a property is worth, Master Appraisal Services can help. Steve, lead appraiser with Master Appraisal Services, is a licensed residential appraiser with more than 30 years of experience appraising homes throughout the Phoenix area. We provide professional home appraisals in Phoenix, Scottsdale, Chandler, Gilbert, Mesa, Queen Creek, San Tan Valley, and surrounding communities.
Before making a major financial decision based on an automated estimate or someone else's opinion of value, contact Master Appraisal Services to schedule an independent home appraisal.
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