What is a Home Appraisal?
A home appraisal is an independant valuation of a home to determine its market value.
In General, a home appraisal is organized by a lender and is usually paid for by a buyer. All loans require an independent appraisal.
The reason the lender requires an appraisal is that you may think a home is worth more money than it really is - leading you to make an offer that may be to high. If the appraiser leads the lender to believe the home is overvalued, lender may feel this is a risk and may not grant you a mortgage.
Basically, lenders want to protect themselves by ensuring the property you are considering buying a loan loan from their institution is worth its market value. The appraisal helps ensure that you the buyer do not end up having negative equity on a home.
The Importance of an Appraisial
Getting a home appraised is extremely important for several reasons. As mentioned above, it can help you find out how much a property is worth. It can also help you lower your taxes and eliminate private mortgage insurance.
A licensed appraiser can also help you with estate planning, analyzing the feasibility of proposed improvements, determing the best use of a property and insurance valuations.
The Appraisal Process
An appraiser's duty is to inspect the property being appraised to ascertain the true status of that property. Toward this end, an appraiser will analyze market data, including both historic and current comparable sales, current offers, pending sales and proposed improvements to arrive at an appraised value for your home. The appraiser will also compare your property to the broader market. Depending on the purpose of the appraisal, the appraiser might choose to weigh diffent factors more heavily than others.
