Appraisals
What is an Appraisal?
An Appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the property's value. The Appraisal is performed by an "Appraiser" typically a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.
Why get an Appraisal?
Obtaining a loan is the most common reason for ordering an Appraisal, however, there are other reasons to get one:
What are Appraisal Methods?
There are 3 common approaches, or Appraisal Methods, used by Appraisers to establish property value. After thoroughly exercising all 3, a final value estimate is correlated. When evaluating single-family, owner-occupied properties, the Sales Comparison Approach is heavily weighted by an Appraiser.
Who owns the Appraisal?
An Appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the property's value. The Appraisal is performed by an "Appraiser" typically a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.
Can Another Mortgage Company be Used After the Completed Appraisal?
Yes. In most cases, you will not have to pay for another appraisal if you change your mortgage company, and depending on the loan program typed, the first lender can transfer it to the new lender. Some appraisal firms may charge a small fee because additional clerical work is required to reflect the new mortgage company; this is called an "Appraisal Retype Fee." The original mortgage company has the right to refuse to transfer the appraisal to another lender. In this case, a new appraisal is needed.
Who determines the market value of a property?
The property seller sets the price, especially for residential property, not the Appraiser. Sellers usually don't order an appraisal because they want to obtain the highest price for their home and therefore don't want to be bound by the Appraiser's assessment.
The real estate agent receives a percentage of the price as compensation and often represents the seller in the transaction and assists them in setting the sale price. They perform a Comparative Market Analysis (CMA), which real estate agents in most states are allowed to perform without an Appraiser's License or Certification. The CMA is vital to the agent’s preparation for a listing by examining recent property sales in the neighborhood to arrive at a listing price. Typically, the agent will suggest a price to the seller based on the CMA however the seller may choose to list their property for a higher price.
How can I assist my Appraiser?
It's to your advantage to help the Appraiser perform the assessment by providing additional information: