What Exactly Is An Appraisal?
By Gavin King | December 29, 2009
With the real estate market in such a sharp tailspin lately, many banks have been having a lot of trouble establishing the true value of the home they are supposed to be lending on. Normally they hire a third party valuation expert, called an appraiser, to assess the value of the home and report back to them. Appraisers are certified real estate experts who can validate the worth of any real estate and are the most reliable way to do so.
An appraisal is designed to use local market trends to validate the purchase price of a home, or to invalidate it. Ideally the bank would want to make sure that the home they are lending money on, and may have to take back in the event of a foreclosure, is worth the money so they can recoup any loses they may have on the loan.
Any can be trained to be an appraiser but there are many certifications for different kinds of appraisers. Most people are familiar with residential real estate, but there are certifications for land appraisers, commercial appraiser and even industrial appraiser as well.
The appraisal has to be a neutral valuation, no matter the certification, so that the best interest of the client, which is the bank, is best served. If this is violated then the appraisal has to be reviewed or thrown out altogether.
In the event that an appraiser can prove that the home is not worth the amount of the purchase, the buyer either has to come up with the difference for a down-payment or cannot get financing for the home. In most cases, the buyer simply would walk away and not complete the transaction. But, without an appraisal the bank can frequently be stuck holding the bag.
A very rare solution is for the buyer to cough up the difference, but they really have to like the property to do that, typically.
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MLA Style Citation:
King, Gavin "What Exactly Is An Appraisal?." What Exactly Is An Appraisal?. 29 Dec. 2009. uberarticles.com. 3 Sep 2010 <http://uberarticles.com/real-estate/how-does-an-appraisal-work>.
APA Style Citation:
King, G (2009, December 29). What Exactly Is An Appraisal?. Retrieved September 3, 2010, from http://uberarticles.com/real-estate/how-does-an-appraisal-work
Chicago Style Citation:
King, Gavin "What Exactly Is An Appraisal?" uberarticles.com. http://uberarticles.com/real-estate/how-does-an-appraisal-work
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