Every year, many people across the United States buy, sell or refinance their American Dream (home). Most, if not all, of these transactions include a simple line item for an appraisal. It is an accepted part of a real estate transaction but it is often taken for granted that people understand the appraisal.
An appraisal is a report made by a qualified person setting forth an opinion or estimate of value. The term also refers to the process by which this estimate is obtained. In conventional mortgages and in the HUD-FHA Direct Endorsement Program, the lender receives a copy of the complete report, showing the basis for the appraiser's estimate. In VA cases and in HUD applications processed by HUD, the lender receives only a statement of the estimate of value, without any detailed supporting data.
The appraiser does not create value, the appraiser is an independent, objective party that interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to the property, consideration must be given to the site and amenities as well as the physical condition of the property. An appraiser may spend only a short time inspecting the property, however, this is only the beginning.
Considerable research for collecting general and specific data must be accomplished before the appraiser can arrive at a final opinion of value.
Real estate appraising is a complex field. The sale of your home may be the largest transaction of your lifetime. Appraisers' opinions can play an important part in almost any real estate transaction and are a vital part of the process,assuring that you get the true value of the property you are selling or that you don't pay more than the property is worth.
After the sale of a home, appraisers are still a part of the picture as the governing body of municipalities also consider appraisals in determining the ongoing property tax rate of a home. Since taxes are a part of every home purchase, pay special attention to how your home is valued by the municipality and, if you feel the amount is not appropriate, you may contest the rate.
If you want to know more about the appraisal process, contact your real estate agent.
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