Real Estate Appraisals
As part of buying a new home, you´ll need to get a proper appraisal done on the property. While it may seem like an unnecessary cost, an appraisal is a big deal.

First off, the appraisal can make sure that there aren´t any major problems with the home. Along with the inspector, they are the two most important people to look at the home before you buy it.

An appraisal will cost somewhere around $300-$400 dollars, but that´s just the "formal" appraisal that is part of your official offer. As part of your offer, you will pay the bank to hire an appraiser to check the home to make sure that the price you´re offering is accurate.

Some folks will take the whole process a step further. They will hire an appraiser on their own completely. They do this to make sure that their initial offer price is on the mark and to help verify that the bank´s appraiser is being honest with their opinion. It´s mostly a matter of money. If you have a few extra dollars to spare, getting a second appraisal done can be a great idea, but since you´re going to be getting one done anyway, it´s not that big of a deal one way or the other.

Some folks wonder why the bank even needs an appraisal. The reason is to protect themselves. They want to make sure that the loan that they are agreeing to back is for the right amount for the piece of property you want to buy. In almost all cases, the appraiser agrees that the asking price is reasonable, but in some rare cases, the appraiser will find major faults and tell the bank not to approve your loan for the asking price amount because the property simply isn´t worth it.

The way an appraiser works is pretty interesting. Not only will the appraiser come in and inspect the home you´re looking to buy, but they also take up to three recent sales in that same general area into account. They consider how much those homes sold for, and then they adjust it for the home you´re looking to buy. In almost all cases, the appraiser´s evaluation is rock solid and based on a ton of empirical evidence.

In some cases, however, the appraiser isn´t able to finish his job and there will be a problem.

In most cases when this happens, it´s a matter of the appraiser not having enough information to base his opinion on. This could be due to the fact that there are simply no similar homes in that area that have sold within the last six months or the appraiser wasn´t able to complete his inspection or something similar.

In other cases, an incomplete appraisal will be due to sheer incompetence. Only half of the states in the US mandate that an appraiser be licensed. Most states do require an amount of training and on the job experience, but the amount of experience can vary wildly and sometimes you just get stuck with an appraiser who can´t do his job.

If you feel like you´ve fallen victim to one of these inexperienced appraisers, you can fight for your loan. There are methods in which you can file a grievance and argue that the appraiser just plain missed something. If your argument is prepared properly, the loan officer at the bank can override the appraiser and lend you whatever amount you asked for. The appraisal isn´t a carved-in-stone mandate, but simply a recommendation from an expert about what the property is worth, so if you feel you got a raw deal, you can still fight for your dream home.

One final tip is that you don´t have to go with the appraiser your bank wants you to use. In many cases, you can recommend a separate appraiser if you feel that the one your lender is going to use isn´t up to snuff. You do have rights and you have the power to reject an appraiser.

Knowing the ins and outs of appraisals can properly prepare you for the whole home buying process. In most cases, the appraiser is your friend and is there to help validate your asking price. But in the cases where the appraiser turns from friend to foe, make sure you know how to fight for your rights.

GBrey