Does the Buyer or Seller Hire the Appraiser?

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People in the market for downtown Phoenix condos often seek information on getting a real estate appraisal on their potential new home. As with other property, the fair selling price on Scottsdale condos is determined by a real estate appraisal.

What Is an Appraisal?

An appraisal is intended to be an unbiased estimate of a fair price for a property. First, the appraiser visually inspects the property, noting such features as location, condition, number of bedrooms and bathrooms, extras like a garage or pool. Measurements and photos are taken and the physical report completed. A less complete approach called a drive by appraisal involves the appraiser driving by the property and then researching real estate records; it is not accepted by most lenders.

After a physical assessment is done, the appraiser determines value by using sales comparisons, cost approach or both. The sales approach takes into consideration recent sales of similar homes in the area using standard formulas to account for such differences as size variances, fireplaces, mudrooms or garages. The cost approach, on the other hand, uses local building costs and labor rates to figure out how much the house would cost to build. The most common type of appraisal is the Uniform Residential Appraisal Report (URAR), which combines the sales and cost approaches.

What is a Real Estate Appraiser?

A real estate appraiser is a licensed contractor usually hired by the lender. Knowledgeable about real estate, an appraising professional knows how to evaluate properties, such Phoenix condos, on the basis of neighborhood, housing trends, physical condition and a host of other variables that go into determining the current value of a home. To get a fair appraisal, it’s best to hire a professional who works with a number of lenders so that there is no conflict of interest.

What Is the Purpose of an Appraisal?

Mortgage lenders generally require an appraisal because they will only loan an amount of money in line with the property’s appraised value. With the high price of homes and condos in today’s marketplace, it’s important to ensure the loan is paying for a home worth its selling price. If the appraisal comes in below the amount of the sale, either the buyer must put more money down or the contract must be renegotiated to account for the lower value.

Who Pays for the Appraisal?

Because the lender is requiring the appraisal, it’s usually the buyer who pays the bill. In most sales, the lender orders the appraisal, the buyer pays for it and then the lender takes a close look at the appraisal itself before approving the mortgage. While drive by appraisals cost less than complete property appraisals, they are often not accepted by mortgage lenders. If the home doesn’t appraise for the agreed upon selling price, the buyer may ask for a second appraisal from a different appraiser. Appraisals are usually paid for at closing, and you should be sure to keep a copy for your own records.

Exceptions to the Rule

In a few cases, sellers may be expected for the appraisal. For instance, in FHA-insured mortgages, the seller or mortgage lender is expected to foot the bill for a second appraisal. Because the real estate business is built on endless negotiations, a bank or other lender can feel free to allow a seller to pay for the appraisal.

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