1. What is an Appraisal?

An estimate of market value (price buyer is willing to pay and seller is willing to accept under normal circumstances.)  The Appraisal report describes the Subject, Neighborhood, PUD Information, Site and Improvements.  The report also includes pictures of the Subject and Comparable, tax map depiction of the lot and a map illustrating the location of comparable in reference to the Subject.

2. Why is an Appraisal necessary?

The lender orders the appraisal report to confirm that the collateral is of sufficient value to support the loan request.

3. What is the cost?

The cost is included in the application fee and varies from lender to lender.  The borrower pays the appraisal fee often with the report fee at time of formal loan application.  These fees are non-refundable, because they are out of pocket costs to the lender.

4. Who completes the appraisal?

An Approved Appraiser.  Each bank has an approved appraiser list,  individuals must be certified.  Most appraisers have a real estate brokers license.
-They must complete 120 classroom hours of appraisal courses
-They must complete 3000 hours of appraisal work
-They must work in the field for a minimum of two years
-They must complete continuing education every two years

5. What does the appraiser require?

-A copy of the sales contract
  -A copy of the legal description
  -A copy of the real estate tax assessment information
  -A copy of MLS sheet, if available

The appraiser arranges access to property through the listing office.


6. May I obtain a copy of my appraisal report?

Yes, however, some rules vary from lender to lender.  Contact your lender for details.  If you have any questions on the appraisal report, refer them to your lender.  The lender is the appraiser's client not the borrower.

7. Are the Appraiser and the Home Inspector the same person?

No.  The appraiser values the home.  The Home Inspector evaluates the major systems (heating, plumbing, etc.) and other aspects of the property (i.e. cracks in foundations and sidewalks) for structural and safety problems.

The appraiser may, however, note certain items on the appraisal such as 60 AMP fuse service, rooms without permanent heat source, dirt floor basements, and insulation or lack thereof.  These items may need to be corrected in order to obtain financing.

8. What does the appraisal report include?

A combination of three (3) approaches may be used to determine value.  Estimate of market value may be "as is" or "subject to."

-Cost Approach- Estimates the cost to reconstruct property as it
exists today; minus any depreciation (most notable in older homes.)   Factors are derived from a standard compilation of costs, Marshall  Swift Handbook.

-Market Approach- Compares the subject property to at least three 
similar properties (comparable) that have sold during the last six 
months and within one mile of the subject's property.  The degree
of similarity of the properties and circumstances surrounding the sales are important considerations.       

-Income Approach - Calculates net income over the life of the
structure, discounted to determine its present value.  Used for
investment properties more so than residential owner occupied
dwellings.