The home appraiser’s job is to determine the current value of a house or other property. Of all the people you’ll interact with when buying or selling a house, the appraiser is the one you’ll probably get to know the least. But he or she may play one of the most important roles in the sale or purchase of your home. What the appraiser finds can be the difference in whether or not you’ll get the house you want or be able to sell the one you don’t.
An Appraisal Is the Bank’s Insurance Policy
A home appraisal’s main purpose is to assure the mortgage lender that the home is worth the asking price. Banks and other mortgage lenders are taking a big risk when they loan hundreds of thousands of dollars to a buyer. Suppose the buyer defaults on the loan, the lender’s only recourse is to foreclose on the home and try to sell it. If the home isn’t worth as much as the loan, the bank will never get its money back.
Comps Are Critical
Interestingly, the whole point of an appraisal isn’t to calculate an objective value for the home-based solely on its size and amenities but to compare it to other homes in the recently sold area. For an appraiser to determine a home’s fair market value, he or she needs an up-to-the-minute understanding of the local real estate market.
Ask For A Copy Of Your Appraisal Report
Since the buyer pays for the appraisal, they have the right to get a free copy of the full report. Lenders are required to send appraisals to buyers promptly but at a minimum no later than three days before the loan closes. If the appraisal comes in at a lower price than the buyer and seller agreed upon, the buyer will have good ammunition to negotiate a lower price.
You Can Protest The Appraisal
If you’re the seller and feel that the appraisal came in lower than it should have, you can protest it. Contact the lender and find out what their procedure is for appraisal disputes. But you’re going to need to be armed with documentation to support your argument. Be sure to include photos and a record of all improvements and comps of other houses that should have been included.
Communication Is Welcome, and Coercion Is Not
Some real estate agents believe that it’s illegal to communicate in any way with an appraiser, but according to The Appraisal Foundation, that’s not the case at all. Appraisers welcome any information that helps them determine the most accurate market value of the home. That includes additional comps provided by the seller’s agent, invoices or receipts for major upgrades and renovations, and proof of continual maintenance and upkeep. However, what is strictly forbidden is any communication specifically intended to coerce or threaten the appraiser into giving a higher home value than the property deserves.