Understanding Residential Real Estate Appraisals
A critical component to buying a home is the appraisal. An appraisal is a third-party professional evaluation of the value of a property that is used to help determine the amount of a loan.
In compliance with government regulation, appraisers hired for a mortgage transaction on a conforming loan are chosen from a pool of qualified appraisers at random. Neither the borrower nor lender have the flexibility of deciding which appraiser will inspect your home.
Mortgage Loan Process
Step 1: Documentation
Step 2: Appraisal
Step 3: Underwriting
Step 4: Conditional Approval
Step 5: Clear to Close
Step 6: Closing
Appraisals 101
A few key components of an appraisal
- The Site: Location, view, topography, lot size, utilities, zoning, external factors, highest and best use, landscaping features…
- Design: Quality of construction, finish work, fixed appliances, and any defining features…
- Condition: Age, deterioration, renovations, upgrades, added features…
- Health and Safety: Structural integrity, code compliance…
- Size: Above grade and below grade improvements…
- Neighborhood: Is the property comparable to others in the neighborhood?
- Functional Utility: Is the property functional as built – style and use?
- Parking: Garages, carports, shops, etc.
Other Factors in Determining Value:
Curb appeal, lot size, and conforming to the neighborhood are obvious to the appraiser when they drive down into the neighborhood and pull up in front of your home.
