The Appraisal in the Purchase Process : ARDELL's Seattle Real Estate Blog

ARDELL's Seattle Real Estate Blog

Mar. 22, 2006 - The Appraisal in the Purchase Process

While the buyer is paying for the appraisal, they are paying for it as part of their loan costs. The appraiser is hired by the lender and works for the lender and his/her purpose is to inform the lender. I just saw an appraisal of a property I know would sell at about $950,000, come in at $750,000. The appraisal was for divorce purposes and it was a unique, difficult to value property. Appraising is an artform, not a science. There is no one absolute number pointing to what a home is worth.

The reason there is an appraisal is in case you do not make your payments and the bank has to foreclose. If you are buying a house for $500,000 and you are putting $200,000 down, frankly, the appraiser doesn't have to agonize over the process. The bank is clearly going to be able to sell it for the $300,000 they lent you to buy it. Now if you are putting zero down, the appraiser is on the line in the event you foreclose and the bank can only sell it for $450,000.

You need to determine what the home is worth. It's great when it appraises and everyone loves those few times when it appraises for more than the sale price (except the seller). Different appraisers will get different answers. Appraising for different purposes when the house is not being sold, like to value for an estate or divorce, often will produce different results than when the appraisal is for a home purchase and ordered by the lender.

THE SELLER NEEDS TO BE AWARE OF THE FACT THAT THE SALE CAN FALL APART IF THE PROPERTY DOES NOT APPRAISE. THE SELLER'S AGENT WILL KNOW IN ADVANCE WHETHER OR NOT THIS MIGHT BE AN ISSUE, DEPENDING ON THE CREDENTIALS OF THE BUYER, AMONG OTHER THINGS.

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Nov. 20, 2007 - RE: The Appraisal in the Purchase Process

Posted by DenverWade

More and more appraisers are feeling pressured by mortgage brokers to inflate appraisals. See this chart about appraiser pressure to falsify property values:

www.reddoorhomeloans.com/images/Appraiser_Pressure_Chart.gif
If a mortgage broker is successful in twisting an appraisers arm, the appraisal can come in inflated. If the deal closes a homeowner will be in possession of a falsified sense of home value. When the homeowner goes to pull equity out of the home, it won't be there. Moreover, they will have overpaid for the property.

Homeowners can protect themselves by paying for their own independent appraisals (expensive yes, but it's more expensive to overpay for a home). They can also choose to work with a reputable mortgage broker who doesn't engage in unscrupulous arm-twisting tactics.

www.reddoorhomeloans.com

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ARDELL DellaLoggia On Seattle Real Estate including Kirkland, Bellevue, Redmond, Green Lake and most areas around Lake Washington North of Downtown Seattle. Phone: 206-910-1000 - Mailto:Ardell@RainCityGuide.com