The simple answer is for protection. Sure I am biased, but there are many good reasons and situations where a real estate
appraisal is required and highly recommended. When we think of appraisals, the first situation that comes to mind is for a mortgage when someone is purchasing property. In most federally funded
transactions, an appraisal must be ordered by the lending institution as a requirement. The buyer pays for this service, typically $300 to $400, as part of their loan application fee, yet the lender, according to
federal regulations is the client and controls the process. The lender wants assurances that they have good collateral so they hire an appraiser, who should be objective with no bias, to estimate a property's
market value. Typically found in most contracts to purchase is a condition, which states that a buyer must qualify for financing. The appraisal is an integral part of the financing condition since the
property must appraise for at least the selling price in most situations. In our market, cash purchases are not unusual and often the astute buyer requests an appraisal be performed where the estimated value must
be equal to or greater than the agreed selling price. So why would anyone spend $300 to $400 when it's not required? Purchasing property is probably the largest single expenditure any person will
ever make, so why shouldn't they protect that investment. Car owners pay a mechanic to check their brakes or change the oil because a car is a major investment. Homeowners have an annual termite inspection
to protect their home before it is infested and major damage occurs. We buy insurance for our property and our health. An appraisal is your protection that your purchase is one you can bank on.
|
