• Be an educated home buyer by learning everything you need to know about appraisals.home sweeet home image by .shock from Fotolia.com
  
  An appraisal is an inspection of a property to determine its value. It is usually performed when the home is under negotiation for sale. The primary purpose of an appraisal is to verify that the appraisal price is at or above the amount the purchaser will be borrowing from the mortgage lender. This ensures that, should the homeowner fall on hard times, there is enough equity in the home to repay the lender. There are several elements that must be a part of the appraisal, so that it can be utilized effectively.
  
  

Lender-Approved

• If the appraisal is being used to prove the market value to a lender, the appraiser must be certified by that lender. An appraiser must be objective; he cannot benefit or suffer from the value he assigns to the home. However, appraisers may see things quite differently. The lender must have confidence in the veracity of the appraisal to approve the loan.
  
  

Certified

• The appraiser hired must be state licensed and certified. Each state requires different hours of education and experience for licenses and certifications; the chosen appraiser should have documentation that proves his qualifications.
  
  

Hired Correctly

• The appraiser is hired by the institution, not the borrower. The appraiser must not have any relationship with the borrower. The lender will not use an appraisal that was ordered by the borrower.
  
  

Condition of Home

• The primary focus of the appraisal is the overall condition of the home. This can cover everything from the quality of the construction to any updates performed on the home. The appraiser is looking for anything that could threaten the safety or health of the new owner, such as cracks in the foundation, mold, lead paint or old construction materials.
  
  

Estimation of Square Footage

• The appraiser estimates the home's square footage by taking a series of measurements. Some appraisers use an exterior measurement, while others take the time to measure interior rooms and hallways. Nonliving areas (garages, covered porches, etc.) are considered valuable, but are not part of the square footage number.
  
  

Comparables

• The appraiser looks at the comparables (other homes in the area that have recently sold) to help set the value. By comparing those properties to the current property, the appraiser can add or subtract value by observing differences, benefits and detractors.
  
  

Copy for Current Owner

• A copy of the appraisal is reserved for the current homeowner, if it is requested. If the owner has a disagreement with the appraisal, he can contact the lender immediately to solve the problem.