Why is it usually necessary to get an appraisal?  What is it like to get an appraisal done?

In most situations, we need a professional, unbiased appraisal of the property you are interested in buying or refinancing to be certain the property's value is at least as much as the proposed loan amount.  If you are making a smaller downpayment and have a lower credit score, we are generally going to be more interested in making sure the property used as collateral for the mortgage is worth as much as the requested loan amount.

A independent real estate appraiser will typically come to your property and inspect the outside and inside of the structure.  The appraiser isn't interested in buying your property.  Do not postpone the appraisal so you have a chance to clean up.  It isn't necessary and doesn't increase the appraised value.  And delaying adds time to the loan process.

Appraiser form opinions on the most likely market value of the property considering, most importantly, sales of properties in the area (often called "comps" or "comparables"), among a variety of other factors.  The appraiser prepares an appraisal report which supports the conclusion (the estimated value).  The reports belongs to the lender contemplating lending money with the property as security.  You can usually get a copy of the appraisal as a courtesy, or as part of state law.  Let us know you'd like a duplicate and we'll coordinate getting it to you, without extra charge.

Lenders want to know whether the property is worth as much as the loan amount, if not more. In the unlikely event the loan originator would have to foreclose on the property (i.e., "take the property back"),  the lender needs to verify the loan amount can be recouped.  But if the loan you are considering depends on borrowing, as an example, 95% of the property's value, but not more, the appraisal may impact your eligibility for the loan that's best for you.  In an example like that -- a "close" case -- the optimal solution is usually to increase your downpayment.  Alternatively, we can solve the issue another way, such as recommending another loan program.

An appraisal can cost from $200 to $500 or more for very complex or high square footage properties. Commercial appraisals are usually from $1,500 to $50,000 (although they can be more), again, depending on how complicated the analysis is.  You have the option of paying the appraiser directly, or we can pay the appraiser for you as a pass-through (as a convenience), which gets paid when you close escrow on the new loan.