The importance of an Appraisal /West Hills Ca./ Woodland Hills/ San Fernando Valley Real Estate

The importance of an Appraisal /West Hills Ca./ Woodland Hills/ San Fernando Valley Real Estate

 (Q) Esperanza,  I would like to know why after having an inspection of house the lender is asking for an appraisal to be done?. Do we really need it, and how important is it?

 
 (A) The importance of an Appraisal is this:
An appraiser is a professional person who can tell you what your home is worth.
(On the seller side )The appraiser will come to your house and list the number and size of the rooms and any extras, such as a fireplace, porch, pool, or garage.
The appraiser will compare your home and property to other homes that have sold recently with similar features. The appraiser then estimates that your home might sell for approximately the same amount of money as similar homes. This is called an appraisal. In short, an appraisal is the estimated amount of money your home may sell for.

 
                                 Home Inspections are not appraisals

(Buyers side)
A property appraisal is a document that provides an estimate of a property's market value. Lenders require appraisals on properties prior to loan approval to ensure that the mortgage loan amount is not more than the value of he property.

Appraisals are for lenders; home inspections are for buyers.

1) To estimate the market value of the property.
2) To make sure that the property meets FHA minimum property requirements standards (heath and safety).
3) To make sure that the property is marketable.
 
The FHA appraisal process will note property deficiencies that are readily observable and found not in compliance with HUD's minimum property requirements/standards. These deficiencies may not be the same as those items noted in a home inspection report.

What is an Real Estate Appraiser?
A real estate appraiser is an impartial, independent third party who provides an objective report on the estimate of value of a real estate. The appraisal is supported by the collection and analysis of data.
A real estate appraiser values real property )land, houses, building, etc.), not personal property (car, jewelry, furniture).
The appraiser determines the physical characteristics of the property to be appraised and estimates value based upon three common approaches to value:

Sales Comparison Market Approach
Cost Approach
Income Capitalization Approach

A state licensed real estate appraiser meets nationally established standards for education and experience, and successfully passes a comprehensive examination. A state licensed appraiser conforms to national ethical and professional standards, which establish the standards for ethics,competency and confidentiality governing professional appraisal practices.

The Federal Housing Authority (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), requires lenders to obtain appraisals of properties securing FHA-insured loans. FHA requires appraisals for three reasons: