The real estate, or mortgage, appraisal is a very important part of the mortgage process. An appraisal is an estimate of the true market value of a property, and it sets the amount that may be mortgaged for a property. In other words, if an appraiser determines that a home is worth $200,000, a mortgage company will not lend a consumer more than $200,000 to purchase that property.
Appraisal issues and concerns are some of our most popular questions at Quicken Loans, so we decided to create a video that will answer all of these questions and more. In addition to what we present in the video, I’ll also discuss a few other important facts about appraisals. Our goal is make sure you get all the information you need to have the best and quickest mortgage possible.
How an Appraiser Determines Market Value During a Real Estate Appraisal
In our new video, Mike Brocker, a licensed real estate appraiser with Title Source, discusses how an appraiser comes up with an appraisal value. In a nutshell, the appraiser visits the house and measures the outside of the house. In addition to this, the appraiser will also measure each room. He or she verifies such features as the number of closets and bathrooms, major updates and square footage above grade (above the earth line), and will also check that nothing is under construction in the home.
After the real estate appraisal inspection, the appraiser then finds comparable properties that recently sold. The more recently, the better. Sometimes appraisers will go back a few months, but very rarely more than six months. Using the comparable properties, the appraiser will make an honest comparison to the property being appraised and offer an opinion of market value.
Things to Know About a Real Estate Appraisal
The following things are always true when it comes to appraisals:
- The appraiser cannot, by law, work for or directly with a mortgage lender.
- The appraiser must be licensed in the state where he or she performs the appraisal.
- The appraiser cannot take into account home cleanliness and style. Only things such as rooms needing work (holes in the wall or peeling paint, for example) may be noted.
- The real estate appraisal is not a home inspection, and the buyer has the option to obtain a home inspection in addition to the appraisal.
That’s it for now. Check out the video and let us know if you still have questions. Thanks for visiting the Zing blog!