Why might you need an appraisal? How do appraisals work?
In most all cases, lenders require a professional, independent appraisal of the property you want to buy to ensure that it is worth at least as much as they are being asked to lend on it. The investor is interested in making sure the “collateral” for the loan is worth lending the amount requested. In 2010, appraisal management firms were federally mandated to actually order the appraisal for lenders.
The appraiser will form an opinion on the market value of the property considering sales of similar homes in the area, amenities, and square footage among other factors. They will prepare an appraisal report explaining the conclusion. You will always receive a copy of the appraisal. As a standard business practice, we email your appraisal to you within 72 hours prior to closing (This is mandated for Conventional financing and our common practice for Government loans like FHA, VA or USDA)
We ask that you provide credit card payment *information* for the appraisal at the time application. Appraisers are 3rd party contractors and we depend on fast turnaround from them. We have found that by getting payment information for the appraisal “upfront”, they give us premium service and turnaround. In fact, the appraiser will be paid at closing, but having the payment information guarantees timely perfomance. Our primary pool of appraisers turn these appraisals around in 24-48 hours. An appraisal can cost from $325 to $500 or more for very large or complex properties. Normally, $375 to $425 is customary.
