<prompt> Human: In the past year, Ive needed two different home appraisals - one ordered by a new insurance company to understand the value of the asset and the second ordered by the bank for a refi. The insurance appraisal was conducted 122014 and was intended to value the cost to rebuild the home since the actual land would not need to be replaced by the insurer. Appraisal amount: 2,629,020. The bank appraisal was conducted 122015 and was intended to estimate the resale value of the home and does include the value of the actual land that the house sits on. Appraisal amount: 2,616,000 valuing the land at roughly 700k and the structure at roughly 1.8m.The house is located in a popular ski town and property values have consistently increased since 2011 and have accelerated in the past 2 years. The house has great views in a desirable neighborhood and had no improvements or damage between the two appraisals. Questions: 1 How could two appraisals for the same property differ this significantly in value with no catalyst? 2 What hidden incentives are there for an insurer to inflate the value of a home andor a bank to deflate the value of a home?  <response>: A lot of it has to do with recent sales of homes in your area. Depending on who did the appraisal they may be looking for different things.Insurance should be looking more for replacement cost. The bank should be looking more for what it will sell for. These two can be vastly different. For example I use to work in insurance and in banking. Once a guy had a house that would cost about 25 million to rebuild, but would only sell for like 5 million. the insurance appraisal came back at 25m and the bank only at 5 million. It was a very detailed and unique house that was over 100 years old hence the crazy replacement value. So yes they should or could be different. Edit: a home loses value after its built, things need to be replaced like the roof or ac. Think about a car your two appraisals were for different things a new house for insurance vs an old house for bank. Whats going to be more valuable? 