APPRPROCESS

What is an appraisal
The typical purpose of an appraisal is to determine market value for financing or
purchasing a property. Market value is the most probable price that a property should
sell for in a typical open market with informed buyers and sellers. Appraisals that are
for litigation, divorce, estate, tax, or other purposes may be evaluated differently due to
the specific requirements of the appraisal.

How does the appraiser determine market value? Market value is determined by what
other properties have recently sold for that are in close proximity to the home to be
appraised. The adjustment factors used include differences in legally permitted square
footage, age, condition, quality of construction, lot size, number of bathrooms, number
of bedrooms, garage spaces, porch & patio areas, swimming pools, location, views,
additional permanent structures, time of sales, conditions of the sale, and other
quantifiable factors. Much of what the appraiser does in selecting appropriate
comparable properties is determined by what is acceptable by lenders. The lender
must be able to sell the loan to a wholesale lender. The perfect comparable property is
one that sold within the last month and is identical in all features to the property to be
appraised.

The Inspection Process
Prior to inspecting the property, the appraiser will perform a search for similar recently
sold comparable properties using the multiple listing service and county records. If the
value is within the range that is anticipated to make the loan work, then an appointment
is set to inspect the property (see comp checks). If there appears to be value
problems, then the lender is consulted prior to setting an inspection time.

Inspecting the home is typically the easiest part of the appraisal process. The average
property takes about 20 minutes to inspect. The appraiser typically starts by measuring
the outside of the home to verify the square footage as reported by county records,
takes exterior photos, and makes notes about the type of materials used and condition.
Then the interior of the home is inspected. The appraiser makes notes as to the
materials used and condition.   Some interior measurements may be necessary. Each
room is inspected and a floor plan layout is later created with a computerized property
sketch program. If a room is unavailable to be inspected, the appraiser is required to
note this in the appraisal. Lenders will typically require the appraiser to return to the
property and inspect the room prior to funding the loan. Delays and additional fees will
apply. Interior photos are taken to show the condition and quality of materials used and
satisfy lender requirements for interior photos. Payment for the appraisal is required at
the time of inspection.

Once the property has been inspected and the condition of the property is know, the
appraiser will drive by similar recently sold properties to determine if they are similar to
the property to be appraised and what adjustments will be necessary.

Writing the report.
Writing the appraisal is the most time consuming part of the appraisal process. There
are many facts and figures to be entered and verified. A typical appraisal is 15 to 20
pages in length. The completion time varies due to the property location, type, and
complexity. Once completed, the finished appraisal is electronically delivered as a pdf
file to the lender. The lender is required by federal law to provide the borrower with a
copy of the appraisal.

Who Owns The Appraisal?
Since the appraisal is usually paid for by the borrower at the time of inspection, the
borrower often thinks that they own the appraisal and can take that appraisal to any
lender they choose. Unfortunately, this is not true. There are many laws and
regulations that must be followed by a licensed appraiser. According to federal law, the
party that orders the appraisal is the client. Borrowers can not order an appraisal
directly from the appraiser for a loan transaction. Only the client (typically the lender or
an attorney) can provide information about the appraisal to other parties since they are
the legal owner of the appraisal. Appraisal reports are confidential by law and
information contained in the appraisal can only be provided by the appraiser to the
client.

There is no such thing as a re-type or letter of release. Some appraisers and lenders
may use these terms incorrectly. If the borrower chooses to use a different lender, then
a completely new appraisal report must be generated. However, a new appraisal report
for a new client (lender) can be completed for the same property by the appraiser.
Since the appraiser is already familiar with the property, a new report can often be
completed for a reduced cost. If the lender paid for the appraisal and the homeowner
wants a reduced fee for a new appraisal for a new lender, then the borrower must
reimburse the lender for the appraisal fee prior to a new appraisal being created. We
occasionally get caught in the middle by lenders who over promise and under deliver,
borrowers who play one lender off another, and both lenders and borrowers who willfully
try to commit lending fraud. We only do what is legally,ethically, and morally correct.