Real Estate Appraisal Facts
Part of buying a home is getting a real estate appraisal. Unfortunately, the whole real estate transaction process is intentionally made confusing by lenders and sellers and unintentionally made confusing by lawyers, judges, and legislators with conflicting interests. For the average home buyer such simple terms as “appraiser” and “inspector” are synonymous. After all, the appraiser and the inspector are paid in a similar fashion, are scheduled in a similar fashion, and come out and apparently do the same things. However, they provide very different services and both are typically required aspects of real estate transactions. If you are not completely sure what an appraiser does, you need to study the appraisal facts before you go into any real estate deal.
A real estate appraisal is one person’s opinion of your home value. However, that person is an expert in the field. Your banker will not issue you a home loan without an appraisal from an approved appraiser. The appraiser’s job, unlike the inspector’s, is to guess what your home is worth to buyers in your market.
The reason your banker insists on an appraisal is that you cannot be trusted to purchase a home for no more than what it is worth to other buyers. Your banker needs to see that if you fail to make your payments, the bank will be able to recover most of the loan through the sale of the property.
This helps explain why the appraiser must be approved by the banker. Some banks have their own appraisers, others have contracts with independent appraisers, and many simply have a list of local, approved appraisers. Hopefully, you and the bank can agree on one. If not, a core real estate appraisal fact is that you won’t get your loan.
Real estate appraisals are typically done by taking into account unique traits of your home and homes nearby that have recently been sold. This is a general starting place for the appraised value of your home, but the appraiser will write a detailed report about the local market and any features of the property being appraised that may make it worth more or less than homes nearby that have recently been sold. Expectations about how long the property would typically take to sell in the local market will also be included.
