An appraisal of a house is one of the most important things a lender will look at when deciding to commit to finance or re-finance a property loan. One item that many homeowners do not understand is that the appraiser works for the lender. By law, appraisers have an obligation to bring the lender a value that is fair and reasonable in the market the house is in.
Many times lenders make the homeowner or prospective borrower pay for the appraisal at the time of the inspection. Even though the consumer pays for the appraisal, the appraisal belongs solely to the lender. If the consumer decides to go to another lender for a loan, they may have to pay another appraisal fee even if the same appraiser does the appraisal. This is based on a federal law. So make sure you are going to get your loan with the lender before paying the fee to the appraiser.
Here are five things that the home owner can do increase the chances that the appraisal is fair.
1) If you have requested a loan and the appraiser for the bank or loan agency requests to inspect the interior of the house, make an appointment and let the appraiser inspect the house. Clean and straighten the house before the appraiser gets there.
2) If you have any prior appraisals of the home, have a copy ready for the appraiser to look at or take back to the office.
3) The appraiser is not a home inspector, but will look in every room of the home. The appraiser may also check the attic, basement, crawl space and any out buildings. Make sure doors and entrances are not blocked.
4) Point out to the appraiser any upgrades or renovations that have been made to the home in recent years. Personal property such as appliances, above-ground pools and furniture are not included in appraisals. Instead, the appraiser will want to know about a new air conditioning unit, roof or other major repair.
5) Leave the appraiser alone as the inspection is performed. The appraiser cannot tell you what the home is worth, as that information can only be given to the lender. The appraisal report will be sent to the lender, and you may be able to get the appraisal information from your lender.
If the lender calls you and tells you that the loan cannot be made because the appraisal came in too low, ask the lender if you can pay for another appraisal. Since an appraisal is an opinion of value, one appraiser may think the house is worth more than another.
In North Carolina if a home buyer, seller or lender has a problem with the way an appraisal is done they can complain to the NC Appraisal Board which has authority over the rules that govern appraisers.
An appraisal will not identify issues related to the land and building; it will only attempt to determine the fair market value of the property.