| An appraisal is required on all residential mortgages and home loans and serves a dual purpose. First, the appraisal assures the investor of the value and condition of the property and secondly, the buyer receives assurance that the property being purchased is of proper value.
The appraiser is an independent third party who is not involved in the transaction. The appraiser is required to render an unbiased opinion of the market value of the property being appraised. The appraiser´s opinion is based on the comparable properties in the immediate market area. Generally three (3) properties are used for the analysis, however the investor may require more.
In preparing the Appraisal, the appraiser will utilize a standard appraisal form on which the "Subject Property" physical attributes will be listed. Next the information on the comparable properties will be listed. The appraiser will then make adjustments in the comparable property value. These adjustments are monetary and some of the areas adjusted will include square footage, lot size, the number of bedrooms or bathrooms or finished basement space.
Upon completion of the adjustments the appraiser then compiles all the data and establishes the value of the subject property. This value is then reviewed by the lender and is a very important factor in the final lending decision. |
