What is an appraisal?
An appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. The Appraisal is performed by an "Appraiser" typically a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.
Why get an appraisal?
Obtaining a loan is the most common reason for ordering an appraisal, however there are other reasons to get one:
- Contesting high property taxes
- Establishing the replacement cost for insurance purposes
- Divorce settlement
- Estate settlement
- Negotiating tool in real estate transactions
- Determining a reasonable price when selling real estate
- Protecting your rights in an eminent domain case
- A government agency requirement
- A lawsuit
Who owns the appraisal?
The mortgage company owns the appraisal even though the borrower paid for it. This is because the mortgage company orders the appraisal on the borrower's behalf, and the appraiser lists that mortgage company on the report. The borrower does have the right to receive a copy; however it's the mortgage company's discretion to give the borrower the original appraisal report.
