Whether you’re in the market to buy or sell real estate, one factor remains constant—the form submitted to a lender justifying or negating the asking price of the property.
Real estate appraisal documents, compiled by licensed appraisers, evaluate the current condition of the property and (sometimes) the future value, based upon projected improvements.
When you understand the role property appraisals play in the buying and selling of real estate, you can maximize your investment potential and minimize your selling risk. The information you need includes:
- Knowing where to locate an appraiser.
- Understanding the different appraisal requirements depending upon the loan origination source.
- Determining what factors will increase or decrease the value of your property.
- Knowing how to spot real estate appraisal fraud.
Find information on real estate appraisal for your areaYou can leave it up to the lender to choose an appraiser for your property or you can request they use an appraiser of your choosing. In most cases, the buyer pays the fee at closing for the appraisal, although it's negotiable in the contract.
Understand property appraisals for rural developmentDevelopment in rural areas is encouraged by state and national programs in the form of rural development loans. Unique to communities with smaller populations, the appraisals performed here follow United States Department of Agriculture (USDA) standards. The property itself must qualify in order for the buyer to get his loan.
USDA Rural Development site for access to the information required on multi-unit housing, residential homes and square foot appraisal forms before marketing investment property.
Know what to expect on property appraisals when the Federal Housing Administration is involvedAppraisals for Federal Housing Administration (FHA) loans are stringent. First-time homebuyers naturally look for the best deal they can find and that often comes from the federal government in shape of low-interest loans and little, or no, down payment. Despite the good intent, an FHA loan closing usually requires more time and the appraiser must be FHA certified. Know what to expect in advance.
Be on the lookout for real estate appraisal fraudUnfortunately, mortgage fraud can occur with the help of a dishonest appraiser who abuses his position and falsely inflates the value of a property in return for a fee. The scam benefits the selling parties and the buyer may not realize what happened until months or years pass. When you suspect an inflated property value, investigate the situation further.
Comptroller of the Currency (OCC). If you feel a licensed real estate professional took part in a fraudulent appraisal scheme, contact your state’s governing board.
- Property appraisals through the Veteran's Administration use the same format the FHA uses and the government guarantees the loan for the veteran.
- Call an appraiser for a preliminary market valuation of your home before you list it with a realtor. You will have to pay a fee but you will have a good idea what your property is worth.
- Take a preliminary real estate appraisal as a starting point in your buying or selling strategy. You can always ask more for your property.