This is one of the most common misconceptions by far. However, it does come with caveats. When appraisals are ordered because a home is being financed, the lender is not going to loan more than the appraised value. BUT, that doesn’t mean a buyer and seller cannot agree on a higher price because actually, they can. This is called an “appraisal gap.” Oftentimes, especially in hot markets, when homes are selling quickly and over asking consistently, you will see more of these deals where the buyer has to cover the appraisal gap, which is the amount agreed upon with the seller over and above what the lender is willing to loan, with cash. If a home is not being financed and it’s being bought with cash, then you never HAVE to sell or buy for the appraised amount, but it’s a great indicator and place to start if you don’t want to pay more than it’s worth in the market or accept less than it’s worth in the market. So yeah, an appraisal does not determine the sales price, but it does play a role in the lent amount allowed as well as in negotiations. Heck, the buyer and seller could even agree on a lower amount than the appraised value if they wanted to.