About Appraisals

A lender will require an appraisal (often two appraisals in the case of jumbo mortgages and larger FHA mortgages).  An appraiser is one professional’s opinion of value of a property on any given day.  The purpose of an appraisal is to make sure the home is worth what you are paying, and the bank has sufficient collateral in the property to make the loan.

There are many very knowledgeable professional appraisers out there; however, new laws dictate how appraisers are assigned, and what comparables they can use and what adjustments they can make to the comparable properties.  Additional rules can be imposed by the lender depending on market conditions and their underwriting standards.

Many lenders must use a “blind lottery” system in assigning appraisers, and the appraiser selected may or may not be familiar with local market conditions for the home and property type. Others are very thoughtful and do proper research.