Importance of the Appraisal

Importance of the Appraisal

Over the past 5 years many areas in the country have seen sharp declines in home values. Thankfully, that trend is starting to reverse. For this reason, most lenders are placing a lot of scrutiny on an appraisal for people considering a refinance. The appraisal is designed to ensure that the value assigned to the home matches the local market.

Basic Definition

The definition of an appraisal is that it represents the market price of a home. This is the estimated price which a seller and buyer would agree upon in a arm’s length sale. Arm’s length means the buyer and seller are not related to one another and undertaking the transaction on their own free will.

Each Home is Unique

Although two homes may sit beside each other in the same neighborhood, they could be vastly different. One may have a basement while the other is built on a concrete slab. One home may have a swimming pool and the other home may not have a yard big enough for a large car. An appraiser will look at the subject home and take down lots of notes about the size and features of similar homes in the area. The important key is that the subject home is compared to similar homes that have recently sold, usually in the last 6 months. This indicates what the market will bear for that kind of home in that same area.

Total Report

Once the appraisal is complete, the appraiser will compile a report and submit it to the lender. This report will have notes about the home’s location, general comments about the area and the detailed info about the home. Items like original build date, square footage and location of the home on a map will be listed. In addition, the other homes used in the appraisal, known as comparable sales, will be listed in detail on the map and in the final report.

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Filed under: Minnesota Blog, Refinance Loans

Luke Skar

Luke Skar is the web developer and content strategist for Inlanta Mortgage in Madison, serving Wisconsin, Illinois, Minnesota and Florida. Guided by his 12-plus years of various mortgage marketing experience, Luke provides top-quality SEO services, effective social media management, and web development and maintenance. Luke’s career in the mortgage industry began back in 2001, as a loan processor. After becoming a loan officer for a number of years, Luke is now the sole owner/operator of madisonmortgageguys.com. To ensure that all the information he posts is fresh, accurate, and up-to-date, Luke relies on the knowledge which his years of dedication to keeping up with the constant change that the mortgage industry provides.

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