The Reason for Appraisal

The term “appraisal” has a specific meaning in the home-and-mortgage process. It’s not an inspection; it is a professional assessment of the value of the property. The companies and individuals that do this assessment are called “appraisers”.

It’s important to understand that the appraiser works for the lender, not the buyer or the seller.  While a professional opinion about value seems like a useful thing in negotiating price, that’s not their job.  Because the property will be used as loan collateral, the lender really needs to know what it’s worth; that’s the job.

Appraisers have the training and experience to put numbers on key aspects of a property:

  • Size
  • Condition
  • How it compares with other properties in the local market

They have the training to focus on things that will affect value; as the video says, damage and neglect affect value but a sink full of dishes does not.

The appraised value can affect transaction details.  If the value is lower than the offered price, the offer might have to change — for example, reducing the price, or increasing the down payment.

Appraisal results are a good point-in-time thing to know. Just remember that the appraisers customer is the lender, not you.

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