What is the Purpose of an Appraisal?
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A mortgage has many specific pieces involved in it. Obviously there is the money supplied by the lender to pay the seller for their asking price. There are also many other items such as the title report and title insurance, a survey (sometimes), proof of homeowner insurance policy and an appraisal. An appraisal is actually one of the more important pieces and yet it still brings questions from buyers and sellers alike.
Required by the Lender
First and foremost, if a home is being purchased through the use of a mortgage then the lender will require a formal appraisal. A licensed appraiser works independently of the real estate agent and the lender to ensure that there is no undue influence on the process. The appraiser’s report will indicate if the home is worth the asking price.
Appraisal ordered after a Selling Price has been negotiated
The appraiser is contacted after the real estate agent(s) and all associated parties have worked out a price for the home. The appraiser will look at the contract along with a host of other items such as
* Square footage of the home
* Local property taxes for the home
* When the home was built
* General shape and condition of the property
* Average sales price of similar homes in the area
The price for the appraisal depends on the area of the country. Sometimes the appraisal fee is paid by the borrower up front and other times it may be paid as part of the closing costs.(...)
Read the rest of What Is The Purpose Of An Appraisal? (248 words)
© Michael Collins - Rock Realty for Janesville Wisconsin Real Estate, 2015. |
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