Why Do You Need an Appraisal?

An appraisal is not just a piece of paper; it's a crucial tool that helps you make informed decisions about your property. Whether you're planning your estate, managing your finances, or selling a property, an appraisal is essential. When you're seeking a loan, federal regulations mandate that lenders or their agents must order an appraisal to ensure the property's

value aligns with their lending decisions.

What does an appraiser do?

Appraisers offer an impartial and well-researched opinion of your property's value, based on a variety of factors such as size, location, condition, age, quality, and more. They consider recent sales of comparable properties to arrive at a fair market value.

The Appraisal Process

The appraisal process involves a series of steps to accurately evaluate your property

Property Inspection: If necessary, an appraiser will inspect the interior and exterior of the property. However, not all

appraisals require this step.

Data Collection: Appraisers collect information from county records, MLS records, and other sources to gather

information about the property and its market area.

Comparables Analysis: Appraisers review recent sales and listings of comparable properties to assess your property's

value.

Approaches to Value: Appraisers may use the sales comparison approach, cost approach, or income approach,

depending on the property type and market conditions.

Reconciliation: Appraisers reconcile the values indicated by the approaches used to arrive at a final opinion of value.

Appraiser Independence Matters

Appraiser independence is a critical aspect of the appraisal process. Appraisers must remain impartial and objective, deflecting any attempts to influence their opinion. This independence ensures the credibility of appraisals and protects the interests of clients and the public.

What to Do If You Disagree with the Appraisal

If you believe important information was overlooked in the appraisal, communicate your concerns to your lender in writing. The appraiser will review your concerns and, if necessary, provide a revised appraisal with commentary addressing your issues.

Frequently Asked Questions

Why isn't the consumer considered the client when they pay the appraisal fee?

Federal regulations require financial institutions to be the client, regardless of who pays the fee.

Will the homebuyer receive a copy of the appraisal?

Yes, the Equal Credit Opportunity Act mandates that creditors must provide a free copy of the home appraisal to the

homebuyer.

What information should I provide to the appraiser?

Prepare an "Appraiser's Package" in advance, including relevant documents, and be available to answer any questions

the appraiser may have.

Can I communicate with the appraiser?

Yes, you can provide property information and the sales contract to the appraiser, but confidentiality and ethical

guidelines must be respected.

How long does the appraisal take?

The time varies based on complexity.

Why does the lender give the appraiser a copy of the sales contract?

The sales contract helps the appraiser assess market norms and confirm important terms.

Why do appraisers sometimes work outside their market area?

Appraisers must be competent in their working area, but they may cover multiple locations. If you suspect competency

issues, contact the appraiser's client.

Does the buyer's financing choice impact the appraisal process?

Yes, appraisers must follow specific standards and requirements, depending on the financing chosen by the buyer.

Who orders the appraisal?

The mortgage lender typically orders the appraisal, often through an Appraisal Management Company (AMC).