About Home Mortgage Appraisal

A home appraisal is a detailed evaluation of a particular property that estimates its value. Home appraisers are highly trained professionals who are state licensed to conduct the appraisals. Typically, a mortgage lender requires that an appraisal of a home must be done before they provide the money to purchase it. This is often required because it provides the lender security, they can be reasonably sure that they would be able to sell the property for the amount they are lending. The appraisal value can greatly affect your ability to borrow the money needed for purchase. If a home appraisal is significantly lower than the purchase price, the lender may decide the risk is too great to lend the money. The same is true when a home mortgage is being refinanced.

What is the Cost of an Appraisal?

Prices vary for appraisal services depending on the particular home. Properties that are large and more valuable can cost more to appraise than smaller and less valuable homes. Costs also can fluctuate depending which type of appraisal is being done. The most common type of appraisal is one in which the licensed appraiser will enter and thoroughly inspect the property. This is different from a drive by appraisal. The drive by appraisal is typically only done when there is already existing knowledge of what the home value is. A drive by appraisal can cost significantly less than a full appraisal.

What are Appraisers Looking For?

Appraisers have a large number of specific things to examine to complete a comprehensive appraisal. The size or square footage of the home as well as the size of the property will be considered. Also, the appraised value of a property will be closely related to the real estate market in the area in which the home is located. Careful examination will allow for the appraiser to record any issues or concerns that can affect the overall value. Things including a leaking roof or a cracked foundation, these can certainly lower the value. The location of the home and the surrounding area including the condition of neighboring homes, accessibility to city services and amenities, and other such considerations must be examined. The amount of time it is estimated to take a property to sell is also a part of the overall appraisal.

The goal of the appraiser is to determine what fair market value would be. Anything that would lower or increase that fair market value, or what someone would likely pay for the home is sought. Once the inspection is completed, the appraiser will compare the property to other recent sales in the area for closely comparable properties. They will take a look at three of four of the closest comparable properties and make both positive and negative adjustments for any differences. By looking at the adjusted valuations, the final appraised value can be determined and submitted.

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