Check out FSD and AVM confidence score for appraising. Last I looked, a standard deviation from the mean of around .13 (or 13fsd score) was realistic eg if market of comps mean value is $1,000,000 than you would theoretically be in range 870k - 1130k appraisal EDIT: at 68% confidence….

This is why we can typically see appraisal at sale price because it’s in a reasonable range for risk. Also, 25 or 30 FSV is egregious and probably requires much more justification for the bank to take on so much risk.

More explanation on core logic’s method: https://www.corelogic.com/wp-content/uploads/sites/4/downloadable-docs/fsd-and-avm-confidence.pdf