Mortgage Appraisal
In order for a mortgage lender to lend you money to buy or refinance a home, they have to know that the property you want to buy is worth at least as much as you are paying for it or the LTV. A Realtor will tell you how they hope your property will appraise for in the current market, but a home appraiser is licensed and trained to be an impartial third party, with no personal stake in how much your home is worth.
The overall function of a mortgage appraisal is the home appraiser will use up to three approaches of value to determine the value of your property. He will look at the sales prices of comparable properties in the neighborhood to discover what other homes have sold for as of the effective date of the appraisal. They will use reports from agents in the Multiple Listing Services, California Market Data Cooperative (Metrolist or similar programs in other states) and county public records to help determine the condition and amenities of comparable homes. The appraiser will also look at rental properties comparable to your home to determine how much income your property could produce if it were on the rental market. Finally, he will study your specific piece of property, looking for quality issues, the condition of the property and improvements that you have made. Each of these approaches should lead him to a realistic value for the home. Some approaches of value are not needed depending on the property and the appraisers analysis of the local market.
The overall function of a mortgage appraisal is the home appraiser will use up to three approaches of value to determine the value of your property. He will look at the sales prices of comparable properties in the neighborhood to discover what other homes have sold for as of the effective date of the appraisal. They will use reports from agents in the Multiple Listing Services, California Market Data Cooperative (Metrolist or similar programs in other states) and county public records to help determine the condition and amenities of comparable homes. The appraiser will also look at rental properties comparable to your home to determine how much income your property could produce if it were on the rental market. Finally, he will study your specific piece of property, looking for quality issues, the condition of the property and improvements that you have made. Each of these approaches should lead him to a realistic value for the home. Some approaches of value are not needed depending on the property and the appraisers analysis of the local market.
