Do You Need a Home Appraisal?

In this article

1. What is a Home Appraisal?
2. How Does a Home Appraisal Work?
3. How is the Appraiser Chosen?

What is a Home Appraisal?

A home appraisal is a process in which a fair market value is assessed and applied to a home that you are purchasing or refinancing. This process is completed by a state certified professional appraiser on behalf of the lender. The appraiser inspects the size, condition, functionality and quality of the home before assigning a value.

An appraisal protects the client and lender so that they do not overpay for the home. A home appraisal helps to establish a property’s value – this means the sales price it would be offered in an open and competitive real estate market.

How Does a Home Appraisal Work?

Essentially, you can expect three stages of a normal home appraisal:

• The Inspection Stage – a licensed appraiser will come to the property and will inspect it to determine fair market value.
• Market Comparison – the appraiser researches similar homes in your area and compares most recent sales to appraise market value.
• Final Appraisal Report – using the data gathered from the inspection and comparison research, your appraiser issues a final appraisal report.

How is the Appraiser Chosen?

Since a mortgage company cannot do appraisals themselves, a licensed independent professional appraiser is selected and conducts the appraisal on the lender’s behalf. By law, the appraisal must be done by a third party who has no interest in the outcome of the appraisal.