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What Exactly Is An Appraisal?

Todays Date: October 20, 2018

With the real estate market in such a sharp tailspin lately, many banks have been having a lot of trouble establishing the true value of the home they are supposed to be lending on. Normally they hire a third party valuation expert, called an appraiser, to assess the value of the home and report back to them. Appraisers are certified real estate experts who can validate the worth of any real estate and are the most reliable way to do so.

An appraisal is designed to use local market trends to validate the purchase price of a home, or to invalidate it. Ideally the bank would want to make sure that the home they are lending money on, and may have to take back in the event of a foreclosure, is worth the money so they can recoup any loses they may have on the loan.

An honest and impartial valuation of the property is the point of an appraisal, and only a certified person can be educated enough to do a sufficient job. The main component of an appraisal is that it is objective and that is to assure that the main goal of the valuation is successful, a true value of the property at that point of the market.

The party responsible for hiring the appraiser is the bank, but the buyer typically ends up paying for the appraisal in most cases.

The frightening side of an appraisal is when there is a willing and able buyer, but the appraiser says the property is not worth the asking price. At that point there is really only one thing that can happen to salvage the purchase and that is for the seller to reduce the asking price.

A very rare solution is for the buyer to cough up the difference, but they really have to like the property to do that, typically.

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