Your personal approval is accomplished early in the loan process, but final loan commitment usually hinges on a satisfactory appraisal. The bank wants to be sure its investment is covered in case you default on the loan.
A real estate appraisal helps to establish a property's market value–the likely sales price it would bring if offered in an open and competitive real estate market–to make sure that the property will sell for at least the amount of money it is lending.
What You'll See on a Residential Appraisal Report
- Details about the subject property, along with side-by-side comparisons of three similar properties.
- An evaluation of the overall real estate market in the area.
- Statements about issues the appraiser feels are harmful to the property's value, such as poor access to the property.
- Notations about seriously flawed characteristics, such as a crumbling foundation.
- An estimate of the average sales time for the property.
- What type of area the home is in (a development, stand alone acreage, etc.).