Appraisers use three approaches: sales comparison (recent sales of similar nearby properties), cost approach (rebuild cost minus depreciation plus land value), and income approach (present value of expected rental income, used for investment properties).
The lender's loan amount is based on the lower of purchase price or appraised value. If an appraisal comes in below contract price, the buyer must close the gap with extra cash, renegotiate, or walk away (if an appraisal contingency is in the contract).
Esempio
A buyer agrees to pay CHF 1.2m for a Zurich apartment; the bank's appraisal comes in at CHF 1.15m, so the maximum 80% loan is sized on CHF 1.15m (CHF 920,000), and the buyer must contribute CHF 280,000 cash instead of CHF 240,000.