You entered into a contract and agreed to a purchase price with the seller. You are applying for a mortgage, and the lender asks if you are ready to order the appraisal. What is the appraisal and why is it necessary? An appraisal is an independent opinion of value provided by a licensed appraiser. The lender requires an independent appraisal of the property to assure that the agreed-upon contract price is representative of the value of homes in the area. The lender will rely on the appraiser’s opinion when approving the loan. So, if the appraised value is less than...
Appraisal
APPRAISERS ARE LICENSED
You may get an appraisal and wonder how the appraiser arrived at that opinion, and is the appraiser qualified? Appraisers are licensed, and to be Certified, must have extensive experience and education. In Arizona, appraisers must have their fingerprints submitted for a criminal background check. If new, the appraiser starts out as a Trainee Appraiser. The Trainee Appraiser must take the required classes and work under a qualified registered Supervisor for 3 years. To become a Licensed or Certified appraiser, the appraiser must pass a National Exam. A Licensed Appraiser must have an associate’s degree, 2,000 hours of experience in...
PROPERTY VALUATIONS CAN BE MISLEADING
An appraisal is typically required when applying for a mortgage. Many people will look to the price per square foot when valuing a home, however, this valuation could be misleading. If you are purchasing a home, the lender will base the loan amount off of the lesser of the sales price or the appraised value. Appraisers look to comparable sales in the neighborhood when valuing a property; they do not focus on the price per square foot alone. Example: If you are purchasing a 2-car garage 2,000 square foot home for $400,000, appraisers will look for other sales of 2-car...
APPRAISAL REPORT: AN OPINON OF VALUE
As you know, an appraisal provides an opinion of value of the property, but, did you also know the appraisal contains comments on the condition of the property? An appraiser will comment on the condition of the property based on what they see during their visit. They will not inspect the property like a property inspector, if there is something they see that may need repair, they will comment on it in the report. For example: If they see stained ceiling tiles, they may call for the roof to be inspected. If they see a window is cracked, they may...
WHAT IF YOU DISAGREE WITH YOUR HOME APPRAISAL
What if you disagree with your home appraisal? Do you have to accept the appraiser’s findings without questioning them? You can question the appraisal; you can appeal the appraisal. The appeal process goes through the appraisal management company. You have to provide data in order to appeal. For example, if there are comparable sales (“comps”) that were not in the appraisal report, you can submit them for review. Remember, the appraiser will only consider comps up to the date of the appraisal. If they closed after the date of the report, they will not be considered. You can also question...
WHAT IF YOU DISAGREE WITH YOUR HOME APPRAISAL
What if you disagree with your home appraisal? Do you have to accept the appraiser’s findings without questioning them? You can question the appraisal; you can appeal the appraisal. The appeal process goes through the appraisal management company. You have to provide data in order to appeal. For example, if there are comparable sales (“comps”) that were not in the appraisal report, you can submit them for review. Remember, the appraiser will only consider comps up to the date of the appraisal. If they closed after the date of the report, they will not be considered. You can also question...
IS AN APPRAISAL NEEDED WHEN APPLYING FOR A MORTGAGE?
An appraisal may not be needed when applying for a mortgage. How can you get an appraisal waiver? Generally, an appraisal is needed to get a home loan, but, there are instances where this requirement is waived. Most home loans are sold to Fannie Mae or Freddie Mac. When underwriting these loans, they are submitted through their software, known respectively as Desktop Originator and Loan Product Advisor. The results determine the documentation needed to approve the loan and whether the property requires an appraisal. It is the algorithms in the software that determines whether an appraisal is needed. A large...