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What is an Appraisal?


An appraisal is an independent valuation of a property to determine its market value.

In general, an appraisal is ordered by a lender or client and is usually paid for by a buyer. All loans require an independent appraisal.

The reason the lender requires an appraisal is that you may think a property is worth more money than it really is leading you to make an offer that may be too high. If the appraiser leads the lender to believe the property is overvalued, the lender may feel this is a risk and may not grant you a loan.

Basically, lenders want to protect themselves by ensuring the property you are considering buying with a loan from their institution is worth its market value. The appraisal helps ensure that you the buyer do not end up having negative equity on a home.

The Importance of an Appraisal

Getting a property appraised is extremely important for several reasons. As mentioned above, it can help you find out how much a property is worth. It can also help you lower your taxes and eliminate private mortgage insurance.

A licensed appraiser can also help you with estate planning, analyzing the feasibility of proposed improvements, determining the best use of a property and with insurance valuations.

The Appraisal Process

An appraiser's duty is to inspect the property being appraised to ascertain the true status of that property. Toward this end, an appraiser will analyze market data, including both historic and current comparable sales, current offers, pending sales and proposed improvements to arrive at an appraised value for your home. The appraiser will also compare your property to the broader market. Depending on the purpose of the appraisal, the appraiser might choose to weigh different factors more heavily than others.

In generating his appraisal, an appraiser will pull from a wide variety of sources, including a local Multiple Listing Service, local real estate professionals, county courthouse records, private data vendors, owner interviews, and his or her own personal knowledge. The quality and reliability of each piece of information will be weighed by the individual appraiser.

How an Appraisal Differs from a Property Inspection

You must keep in mind that an appraisal is different than a professional home inspection. An appraiser formulates an opinion of a property's value for a lender, while an inspector educates the buyer about the condition of the property and its components.

The Ultimate Value of an Appraisal

An appraisal performed by a professionally licensed appraiser is an invaluable tool that will allow you to make wise real estate investment and sales decisions.

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cacc copy.gif (851 bytes)Member Chillicothe Area Chamber of Commerce
Edwin S. Turner, Real Estate Consultant/Appraiser

Member Missouri Association of Realtors
Member Missouri Association of Realtors - Appraisal Section
Member National Association of Realtors
Member National Association of Master Appraisers

Contact us for your appraisal and real estate consulting needs... (1940 bytes)

This page updated 06/28/2006.
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