Hey there, I’m Travis Andersen, your local real estate expert here in the Twin Cities, Minnesota. Today, I want to talk about something that affects nearly every home buyer who’s financing their purchase: the appraisal lie. It’s one of the biggest misconceptions I’ve seen in my years of working in real estate, and I’m here to set the record straight. Let’s dive right in.
If you’re buying a home in the Twin Cities and getting a mortgage, chances are—over 90% of the time—you’ll need an appraisal. So, what exactly is an appraisal? It’s a third-party opinion of a home’s price. An appraiser visits the property, takes measurements, snaps photos, and gathers data. Then, they head back to their computer, analyze the home, and compare it to similar properties that have sold nearby, typically within a mile radius. Based on these comparable sales, they assign a value. Let’s say, for example, they determine your home is worth $425,000.
When you peek into that appraisal report, you’ll notice adjustments. Maybe there’s an adjustment for a deck, a fireplace, or the difference between a three-car garage and a two-car garage. Essentially, the appraiser is comparing your home feature-by-feature to those sold homes and tweaking the value based on the differences.
Here’s where the biggest lie comes in: the appraised value is not the true value of your home. Most buyers assume that when they get an appraisal, that number—say, $425,000—is the definitive worth of their property. But it’s not. It’s just an opinion. And here’s the kicker: the appraiser gets a copy of your purchase agreement before they even start.
In psychology, there’s a concept called priming. If I tell you a home is worth $425,000 and ask you to confirm it, you’re already inclined to see it that way. That’s exactly what happens with appraisers. They know the price you agreed to pay—$425,000 in this case—and they’re subtly (or not so subtly) working to hit that number. They adjust their analysis to match what’s on the purchase agreement. Most people don’t realize this, and it’s rarely explained to them.
So, if the appraised value isn’t the real value, what is? Let’s break it down: the appraised value reflects past data—what similar homes sold for. The market value, on the other hand, is current data—what your home is worth relative to other homes for sale right now. It’s a combination of what you paid for the home and what someone else would pay for it at this moment.
Appraisals are still important. They’re required for mortgages and give us a solid starting point for understanding a home’s worth. But don’t put all your trust in that number. Once the report is printed, handed to you and your lender, and you close on the home, it’s basically irrelevant. You could toss it in the trash. Moving forward, your home’s value will depend on the market—what homes are selling for at that time.
Today’s Market Update: Farmington, Minnesota
Speaking of the market, let’s take a quick look at Farmington, MN, as of April 2025. Single-family homes dominate here, making up 76% of all sales. The average single-family home in Farmington is going for $451,000. These are typically four-bedroom, three-bathroom homes built in 2001, with about 1,709 finished square feet.
Compare that to townhomes and condos, which account for 24% of the market. Those average $284,700 and are usually three-bedroom, two-bath homes built in 2006, with 1,479 square feet. It’s a great snapshot of what’s happening in the Twin Cities area right now.
Final Thoughts
The takeaway? Appraisals are a tool, not the gospel. Understand the difference between appraised value and market value, and you’ll be a savvier home buyer. If you found this helpful, feel free to leave a comment, reach out with questions, or share this with someone navigating the Twin Cities housing market. I’m Travis Andersen, your local real estate expert, and I’m here to help. All my best to you and yours!