The appraisal is one of the many pieces in the puzzle that must fit together before you can go to closing. It is important to understand how the appraisal affects the closing and its significant role in the home buying process.

Why do I, the buyer, need an appraisal?
You may feel the price you are paying for your new home is a fair price; however, the lender has never seen the house and has no real idea of its worth. So the lender requires an appraisal to get a neutral opinion of value, and to assure that the home is worth what you are paying for it. After all, the lender is making a big loan on the home, and needs to protect his investment.

Does the buyer have to pay for the appraisal?
Yes. The cost of the appraisal is one of a number of fees required to get a loan, just like the loan origination fee, the attorney's fee, or the survey fee. Just think of them all as "loan processing fees".

Will I be able to get a copy of the appraisal?
Yes. The appraiser delivers two copies of the appraisal to the lender, and you can contact the lender to receive a copy of your own.

How do appraisers come up with the "bottom line" on an appraisal?

Let's use an example to understand the appraisal a little bit better. Let's pretend your friend wants to sell you his car for $10,000. You don't know if that's a fair price or not. So you go out and find as many people as you can who have recently bought or sold cars similar to his. From the range of prices

you gather, and by comparing features and condition, you decide if your friend's asking price is fair in today's market.

That's basically how an appraisal works. Appraisers, after measuring your home, assess its overall condition, then search a database of recently sold homes similar to yours - ones located in your neighborhood or as nearby as possible. Upon making dollar adjustments to account for important differences between homes, the appraiser determines what's called the "market value."

What you were doing in the "car example" above was to determine the current "market value" for the car. You were "appraising" the car because you did not want to pay too much for it, and you didn't want to embarrass your friend (or yourself) by offering a price that would be ridiculously low and probably be rejected. That is why we sometimes recommend you have an appraisal done before making an offer.

As a certified appraiser, I can answer all your appraisal questions.

Kay Hunkins - Consultant,
HomeBuyer Coach & Appraiser

Burlington, Greensboro & Triad area, NC
336-686-2177   Toll-free: 1-888-315-7284
Fax: (Toll-free) 1-877-273-2689
Websites: www.khunkins.com
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