Mortgage Process Step #2
Appraisal Stage
Understanding Residential
Real Estate Appraisals
A critical component to buying a home is the appraisal. An appraisal is a third-party professional evaluation of the value of a property that is used to help determine the amount of a loan.
In compliance with government regulation, appraisers hired for a mortgage transaction on a conforming loan are chosen from a pool of qualified appraisers at random. Neither the borrower nor lender have the flexibility of deciding which appraiser will inspect your home.
Appraisals 101
A few key components of an appraisal
The Site: Location, view, topography, lot size, utilities, zoning, external factors, highest and best use, landscaping features…
Design: Quality of construction, finish work, fixed appliances, and any defining features…
Condition: Age, deterioration, renovations, upgrades, added features…
Health and Safety: Structural integrity, code compliance…
Size: Above grade and below grade improvements…
Neighborhood: Is the property comparable to others in the neighborhood?
Functional
Utility: Is the property functional as built – style and use?
Parking: Garages, carports, shops, etc..
Other Factors in Determining Value:
Curb appeal, lot size, and conforming to the neighborhood are obvious to the appraiser when they drive down into the neighborhood and pull up in front of your home.