Appraisal Avenue

In everyday conversation, the terms price, cost, and value are often used interchangeably. But in real estate, each has a distinct meaning—and understanding the difference is essential whether you're buying, selling, or having a home appraised.

As a certified residential appraiser, I frequently help clients navigate these terms. Here's a clear explanation of how they differ—and why it matters.

What Is Price?

Price is the amount a buyer actually pays for a property.

It’s determined by what a buyer is willing to pay and what a seller is willing to accept at a specific moment in time. Price is often influenced by market demand, competition, timing, and emotions. It doesn’t necessarily reflect the true market value of the property.

What Is Cost?

Cost refers to the amount it takes to build, renovate, or replace a property.

This includes materials, labor, permits, and other construction-related expenses. While cost is important for insurance, budgeting, and construction decisions, it doesn't always align with what the home would sell for on the open market.

What Is Value?

Value is the estimated worth of a property in a given market, at a specific point in time.

In appraisal terms, market value is based on what a typical buyer would pay under normal conditions. It is driven by objective data—not opinions or construction budgets. Appraisers determine value by analyzing a combination of factors, including current market trends, comparable sales, condition, size, and features.

When appropriate, we also use recognized analytical methods—such as paired sales analysis, regression modeling, and sensitivity analysis—to help identify and support the adjustments made for differences between the subject property and comparable sales. These data-driven techniques ensure our conclusions are well-supported and reflective of actual market behavior.

It’s also important to understand that appraisers do not make the market—we interpret it. Our role is to reflect how buyers and sellers are currently behaving in the market, not to create or influence value. A home appraisal is a professional opinion based on evidence and experience—not personal judgment or guesswork.

Final Thoughts

In real estate, price is what you pay, cost is what you spend, and value is what it’s worth. They are connected—but not interchangeable.

If you need a reliable, professional home appraisal for a divorce, estate settlement, tax appeal, or pre-listing valuation, I’m here to help. Contact me today for an accurate, unbiased appraisal that reflects real market conditions.