When a buyer applies for a mortgage, the lender requires a bank appraisal. This is an independent third party licensed appraiser who values your home as a "disinterested party", so to speak. Really , what the bank is doing is protecting their own investment for when they grant the loan.
The underwriters want to make sure they are giving a loan based upon current market value, and not lending too much money on a property that is not worth it. The bank appraisal is ona standard form, costs anywhere from$300- $500 and is paid for by the buyer, for the benefit of the bank to ensure that the property value is in line with what the purchase price for the property and the loan to value ratio.
So even if a buyer was going ready and willing to overpay for a property, and wanted to obtain a loan from the bank to do so, the appraisal and the loan to value ratio would be deciding factors in whether the buyer would obtain the loan. So the appraisal is a good thing. It's an unbiased check and opinion of value.
TIP: Buyers, remember,you must ASK the bank for a copy of the appraisal that YOU paid for, or you will most likely never see it. Expect a nominal charge of $5 to $10 for your copy.