What is An Appraisal?

An appraisal is needed in most cases where a loan is involved. Your final loan will not be approved until your lender orders a professional appraisal of the home to make sure that the agreed-upon selling price is justifiable based on the current market value of the property. The cost of the appraisal is typically determined by the complexity of the appraisal report and the time required completing it. This cost is generally factored in as a closing cost.

A professional appraiser will select the appraisal method that is applicable to the particular property to arrive at an unbiased opinion of value. One approach is to look at comparable homes in the area that have sold within the last six months. If there are a number of similar properties that have sold recently, the appraiser's job is easy. It is more complicated to arrive at the appraised value if your home is located in a rural area or a diverse neighborhood. The appraised value will usually be very close to the sale price. If the appraisal comes in lower, the real estate agent may be able to provide the appraisers with additional information on recent sales which will result in increased value.