01/08/2024
Appraisal Explanation from a Consumer’s Perspective
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An appraisal is an independent, professional assessment of a property's fair market value. It's crucial for obtaining a mortgage because it helps lenders determine how much money they're willing to lend you. In simpler terms, the appraisal tells the lender how much the house is worth, and they won't lend you more than that amount.
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Here's a breakdown of the appraisal process from a consumer's perspective:
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1.) Ordering the appraisal:
• Your lender will typically order the appraisal once you've submitted your loan application and all required documentation.
• They'll hire a licensed appraiser who specializes in your area.
2.) The appraisal inspection:
• The appraiser will visit the property and conduct a thorough inspection. This usually takes about 30-60 minutes.
• They'll take photos, make measurements, and note the property's condition, features, and amenities.
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3.) Appraisal report:
• After the inspection, the appraiser will write a report that includes:
• A description of the property
• Comparable sales of similar properties in the area
• Adjustments made for any differences between the subject property and the comparable properties.
• The appraiser's final estimate of the property's fair market value
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4.) Receiving the appraisal:
• The lender will receive the appraisal report and review it carefully.
• They'll use the appraised value to determine your loan amount and loan-to-value (LTV) ratio.
• Make sure you get a printed copy of the appraisal.
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5.) Your role in the appraisal process:
• While you don't need to be present during the appraisal, it's helpful to be prepared.
• Make sure the property is clean and tidy and remove any personal belongings that could distract the appraiser.
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If you have any questions about the appraisal process, be sure to ask your lender.
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Here are some additional things to keep in mind about appraisals:
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• The appraisal cost is typically borne by the borrower and is usually around $300-$500.
• The appraisal is just one factor that lenders consider when making a loan decision.
• They'll also look at your credit score, income, and debt-to-income ratio.
• If the appraisal comes in lower than the purchase price, you may need to negotiate with the seller or come up with more cash for a down payment.
• You have the right to challenge the appraisal if you believe it is inaccurate. You can do this by contacting the appraiser or your lender.
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I hope this explanation helps!
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The Real Estate Matchmaker!
Tom Scaglione, ePRO, SFR, Realtor
Future Home Realty, Inc.
[email protected]
Direct: (813) 310-8200
Serving Tampa Bay Area Since 1987.
