Robert A. Hulme - Realtor - Loan Officer
The Real Estate Appraisal is an important part of your home buying transaction. The appraisal helps to establish what the property's market value actual is, in fact it would likely be the main tool in helping the seller establish the proper selling price.
Lenders require an appraisal when the home is offered as security for a loan; they want to make sure that the property will sell for at least the amount of money it is lending. Real estate agents often use a comparative market analysis (CMA), with an appraisal to help their home seller determine a realistic asking price for their home. Many times, experienced real estate agents will come very close to an appraisal, but usually the appraisal is very detailed and is the only valuation lenders will accept when deciding whether or not to lend the money.
Recently the Appraisers have come under a very close watch from state and federal officers. Many believe that fraud has taken place in various areas of the country and has forced officials to take a closer look at how to regulate the appraiser industry. Given present state and local policies it is much more difficult to make fraudulent appraisals and be able to get away with it.
The two most common types of appraisals are the Sales Comparison Approach and the Cost Approach. The most common one in the Residential area is the SCA, where comparables are taken from like properties to help determine a proper price.
Your personal approval is accomplished early in the loan process, but the final loan commitment usually hinges on a satisfactory appraisal. The bank wants to make sure its investment is covered in case you default on the loan.
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