Real Estate

When you have the perfect home picked out and you know this is the home you want, your lender will require you to have an appraisal upon the request to use the home as security for a loan. A real estate appraisal will help in establishing a property’s market value, the sales price it would probably bring the seller, if offered in an open and competitive real estate market.

The reason the lender requires the real estate appraisal is because they want to ensure that the property would sell for at least the amount of money you require for your loan. Simply put, if the lender should ever have to foreclose, they want to ensure they would be able to get their moneys worth.

A real estate appraisal is not to be confused with a comparative market analysis (CMA). Real estate agents commonly use a CMA as a tool to determine a realistic asking price for home sellers. Although, an experienced agent may come extremely close to an appraisal price with the CMA, an real estate appraisal’s report include a lot more detailed information, not to mention the fact that it is the only evaluation report a bank will accept when making the decision of whether or not to loan money. Read the rest of this entry »

Everyone involved in the sale of real estate has a vested interest in the results of a appraisal. The outcome affects the seller, the buyer, the lender, and even the realtor.

A too low valuation of the property by the appraiser could mean a seller must lower the asking price. For a lending officer, it could mean a lesser commission or none at all. A too high valuation means the buyer could be paying more than the property is worth. For the realtor, his/her commission could go higher or lower, which is based on the purchase/sell price of the real estate.

An appraiser, who should be licensed by the state, performs the property appraisal. It is best to hire someone local with years of full-time experience in order to get a more accurate appraisal. The appraiser and appraisal are governed by the minimum standards, published periodically in the Uniform Standard of Professional Appraisal Practice by the Appraisal Foundation. The Foundation is chartered by Congress.

The recent real estate bubble, unfortunately, brought problems for appraisers and many involved in real estate transactions. According to Realty Times in their April 2006 issue, appraisers have been routinely asked by lenders to inflate values to keep up with the volatile real estate market. One appraiser in San Diego quit and turned in his license to the state, after being fired three consecutive times for refusing to inflate his valuations. Now, appraisers across the United States are under a microscope from federal financial regulators and Congress. Read the rest of this entry »