An appraisal for a real estate property carries with it some heavy implications when you consider the buying and selling process. Everyone involved will want to see why the appraiser’s report has to say, from the buyer, the seller, the mortgage finance company, as well as the realtor.
If the valuation report places the value lower than what had been proposed, the seller will be forced to also lower their asking price. This also affects the commissions of the intermediaries, since it is normally a percentage of the selling price. If the value goes up, the buyer will have to look for more funding to acquire the property. The intermediaries shall be happy with this since they get to earn more in the process.
Appraisals are carried out by licensed appraisers. They have express permission to work in your region from the appropriate authorities. You need to make sure they are based in the local area if they are to do a good job. You need to also make sure they have integrity. There have been reports of several appraisers who can collude with either party to lower or raise the value of the property, as per the party asking. This is unethical and unfair on the other party, as they shall suffer the cost of those changes.
Appraisal services can be sought after by the buyer who wishes to know the true value of the property they are about to acquire. The same services can be sought after by the mortgage company directly, to ascertain the risks involved in lending the purchasing funds. Some of these mortgage companies have in-house appraisers, who shall handle such duties. It is wise as a buyer to hire another appraiser, to get a fair reading of the house. This way, the mortgage amount and the accompanying interests shall be both manageable, and fair. A seller may also hire an appraiser when they need to know they are being given a fair offer on the house. It is therefore clear that each party in this process has specific reasons to hire an appraiser. It is even wiser to make sure that the hired appraisers are independent, for you to get an accurate and objective report.
Each appraiser approaches such a task using different parameters. This means that you can expect different conclusions to this exercise from different parties in the process. There are no fixed regulations on how an appraisal shall be conducted, or which areas shall be examined and which ones not. In cases where it has become difficult to agree on what is the acceptable value of the property, another approach is available. Those that are seen as worth lower than stated may have to be renovated, to ring up their value. Alternatively, a seller has the right to refuse to sell if they feel they will be making a loss. The appraisers can also meet to review their reports and make a collective and agreed upon one.
Whichever party you happen to represent in such an arrangement, it is best to get the appraisal exercise done right. You need to work with a reputable, experienced and highly skilled appraiser for the best results.