Understanding the Appraisal Process and What It’s All About

A home appraisal is part of the loan approval. Your lender will need to determine if the home you are buying has the same value as the agreed-upon purchase price in the purchase agreement. An appraiser will be hired to determine the worth of the property.

To eliminate any undue influence on the appraisal process, the appraiser must be assigned by an independent third party and cannot have direct contact with the lender.

The task of the appraiser is to arrive at an indicated value of the property by researching comparable sales within the same geographical area. The sales should be recent and have closed within the last 90 to 180 days. Typically, the appraiser will pull the comparable sales from an online database prior to visiting the subject property.

In addition to obtaining the square footage and bedroom/bath count, the appraiser will note any adverse condition issues with the subject property that may affect the lender’s ability to lend on the property.

After visiting the property, the appraiser will make value adjustments to the comparables where they differ from the subject property: for example, in square footage, bedroom/bath count, condition or location. These adjustments help the appraiser arrive at a value.

Once a value is determined, the appraiser submits the report to the appraisal management company (AMC), so it can be given to the lender. Any questions about the appraisal must be directed to the AMC.

I can further explain this very important part of the underwriting process for your mortgage, and I am just a call or email away.