An appraisal is an unbiased estimate of the true fair market value of a home, ordered by all lenders in order to obtain the market value of the home and ensure that the borrower is requesting the proper amount of money. The appraisal normally includes the information for similar sales in the area, the property’s condition, and how the neighborhood it’s located in affects its value. An appraisal is performed by professionals who are licensed and certified to fairly determine the value of a home in the state the property is located. An appraiser creates an informed opinion on the home’s value based on required training, tests, on-the-job experience, and continuing education required by the state. They’re also required to justify any findings that could influence the home’s value in their reports. It is a heavily regulated business with severe consequences for anyone found to be creating deliberately misleading or biased reports.
Appraisers look at the condition of everything that is permanently part of or attached to the house. Décor and furniture have no bearing on the appraisal process; the home’s physical characteristics (location, age, size, lot size, number of bedrooms and bathrooms) are what determines the appraised value. Sellers and buyers have the right to challenge an appraisal if they feel there are any inaccuracies. Lenders review appraisals by checking it against other appraisal reports for sales in the same neighborhood. This system helps the lender, along with the buyers and sellers, to catch any issues that may arise and require an investigation into the appraisal.