Number 3 in my 7 Part Series of My Home Buying Guide.

The Appraisal

One of the key components of your loan approval will be the price and condition of the home you are financing. In order to determine this value and condition, the lender will usually require that an appraisal is done.

The appraiser will often visit the property and take photos of the interior and exterior of the property. They will then compare it to all of the homes in that subdivision that have sold and closed within the past 6 months. They are typically able to travel up to 1 mile away from the property to get this information if there are no recent sales in the subdivision or neighborhood where the property you are buying is located.

Once all of this information has been gathered they will then make adjustments and compare your home (the subject property) to all of the other homes (the comparables) in the area and arrive at a value.

This form is then sent to the lender through an Appraisal Management Company that may have an audit department to ensure the appraisal is in compliance with all regulations.

If you are applying for an FHA or a VA loan the appraisers must be on the approved lists of these agencies.  Both programs have slightly more stringent requirements for the condition of the property than a Conventional loan. If the appraiser does note repairs on the appraisal they will often have to be completed and re-inspected before the lender will allow the loan to close.

In today's lending world you loan officer is prohibited from contacting the appraiser directly if there is a question of value. So, if the appraiser comes back with a report that is 

In our next issue we will discuss the Loan Terms and disclose a secret most lenders will not share with you.

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God Bless

Chris Rowe