Have you ever suffered "buyers remorse"? Should I have made the purchase? Did I pay too much?
If you bought a new table or a new lamp the questions may be just as real but the consequences are less costly than when you buy a house. In addition the task is much more difficult because you cannot make comparisons in the same way. If you find a lamp you like at a furniture store you may find a similar one at Wal-Mart or Target that are close enough that you can compare the price to be sure that you are getting good value for your purchase. Comparing houses and assigning value is much more complex. It requires training, experience and access to large amounts of data in order to effectively estimate the value of a house. Each house is unique and must be evaluated as such.
Can you rely on your real estate agent to insure that you are getting "good value"? In a simple word NO. Your real estate agent does not have the training to determine value. But, even more important, while you may call him or her "your real estate agent", unless you have specifically engaged a "buyers agent", all real estate agents work for the seller. This means that they are professionally bound to protect the sellers interest. If the house is overpriced, even if they know it, they are not permitted to tell you. To inform you of that fact would be a violation of their professional ethics and they could lose their license. The only way that you can know the value is to have your own appraisal done. If the house is worth more, you have found a bargain. If it is worth less then you are in a better position to evaluate the purchase or possibly to negotiate a better price. Conceivably saving many times the cost of an appraisal. Either way you will know the value of the property.
Yes! The bank or finance company will order an appraisal before they lend you the money. This is to protect their investment. To insure that there is sufficient equity that they could recover their money, if necessary. Before this point is reached, though, you have already made a financial and emotional commitment to the purchase. Should you not get your own appraisal to protect your investment? It should be done before you make the offer!