Real Estate Appraisal
A real estate appraisal is important because it provides your lender with an estimate of the property’s current market value, which will be used to calculate your loan to value ratio. Should you happen to default on your loan, your property may be sold through Foreclosure in order to compensate for the lender’s losses. How much the property is worth obviously helps determine what the property will earn back for the lender in such a case.
An appraisal also gives the lender information regarding any issues or problems with the property that may prevent an easy re-sell in the future. This is generally referred to as “marketability”. A house may ostensibly be valued at $865,000 but contain unusual or substandard features that lower its marketability. This is usually compared with against other homes in the neighborhood.
There are several different types of appraisal forms, including those for single-family houses, commercial properties, undeveloped land, and condominiums. Check with your broker to make sure your appraisal is being completed on the righttype of form for the property.
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