May 5th, 2015

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As a homeowner or a potential homeowner, you will be faced with an appraisal at some point in time. Hopefully, something contained in this article will help you when confronted with an appraisal. It is not the intent of this article to explain the complete appraisal process but to acquaint buyers and sellers with some facts about appraisals. Here are some of the instances when you may be faced with an appraisal: (1) applying for a mortgage loan during the purchase of a home, (2) applying for a re-finance loan when there is a need to seek re-financing of your current mortgage, or (3) making application for a homeowners’ insurance policy to make sure your home is properly insured. Believe it or not, if these appraisals were performed at the same time and by different appraisers they would result in different values for your home. An appraiser is a person that gives his/her opinion of value based on current market conditions and other facts surrounding the property. An opinion by definition is a belief not based on absolute certainty but on what seems to be true. For that reason alone, it should be clear how the appraised value of a house can vary from one appraiser to another. To emphasize the point further, I would say “if two appraisers performed independent appraisals of the same house at the same time more than likely they would give different opinions of value”. Their opinions of value could be close or could be a few hundred or a few thousand dollars apart. For persons not familiar with the appraisal process may not understand why there is a difference. But, if you bring yourself to think of appraisals as an “opinion of value”, you will understand how appraisals can differ in value. This difference could have a favorable or unfavorable impact on the sale or purchase of a home. I have had many sellers to pay for appraisals prior to placing their home on the market. In many of these cases, these appraisals were valued higher than the appraisals ordered by the lender for the buyers. Needless to say, this situation is always hard for sellers to accept.

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