An appraisal is a report that helps to determine the market value of a property. Appraisals compare similar homes in the area to substantiate the value of the property. The term "comps" is often used in reference to this report. As required by the lender, the appraiser's report can be prepared by either a simple drive by the property to a full blown inspection with photographs of the real estate with color pictures. Since 2009, the appraisal game has changed. Whereas before then the appraiser was often a local individual, now it may often be a non-local individual. This individual may be unfamiliar with what's going on in the neighborhood and the neighborhood's norms. Also, lenders are requiring more market information, including more facts about the structure, more photographs to document the findings, and more demands for "comps" to help establish the baseline for the home's value.
So, be present when the appraiser is doing his work. Ask about the appraiser's familiarity with the neighborhood and recent local sales to make sure that the house gets apples-to-apples comparison. Strive to be in agreement on what exactly constitutes, "the neighborhood". Furthermore. it doesn't hurt to have the real estate agent there also.
I will be going into more of this in a future post.
What has your experience with the appraisal process? Let me know.
