Appraisal
Definition:
An appraisal is an unbiased professional assessment of a property’s market value, typically conducted by a licensed appraiser. Appraisals are most commonly required by lenders during the home-buying process to ensure that the loan amount does not exceed the property’s actual value. The appraiser evaluates factors such as the property's condition, location, and recent sales of comparable properties (comps) to determine its fair market value.
🔍 Did You Know?
If the appraisal comes in lower than the purchase price, the lender may not approve the full loan amount, which could lead to renegotiation between the buyer and seller.
Examples:
Example 1:
A homebuyer is purchasing a property for $350,000. The lender orders an appraisal, and the appraiser determines that the property’s market value is $340,000. The buyer must either negotiate a lower price with the seller or make up the $10,000 difference out of pocket.
Example 2:
An investor applies for a refinance loan on a rental property. The lender requires an appraisal to confirm the property’s value before approving the new loan. The appraiser examines recent comparable sales and the property’s condition to estimate its current market value.
Why It’s Important:
An appraisal protects both the buyer and the lender by ensuring that the property is worth the amount being paid and financed. It helps prevent buyers from overpaying and lenders from issuing loans that exceed the property’s value. For sellers, a strong appraisal can support their asking price, while for buyers, it provides confidence that they’re making a sound investment.
Who Should Care:
- Homebuyers who need an accurate assessment of the property’s value before securing financing.
- Lenders who use appraisals to determine whether a property’s value justifies the loan amount.
- Real estate investors who need appraisals for refinancing or purchasing investment properties.
Picket Team
The open real estate company
Picket is on a mission to make real estate open, efficient, and fun for all
Try Picket
Picket Team
Create Your Picket Account
Open {pricing} API
Already have your own system? No problem. Try Picket's API instead.
Developer Docs
