What Is A House Appraisal?

What is a house appraisal? An appraisal is an independent third party estimate of the value of a home. An appraisal is an independent third party estimate of value. The appraiser has to go through a fair...

An appraisal is an independent third party estimate of value. The appraiser has to go through a fair amount of training and has to pass the test for the entry level appraiser's license and then it goes up. The idea behind an appraiser coming in as a third party is what they are going to do is look to see what other buyers have been willing to pay for a house like this, in this neighborhood. Now the value to the borrower or the buyer is that it helps the buyer recognize whether they are paying what other people have been willing to pay or if they are overpaying, or possibly underpaying. The reason the lender comes in and says to have this house appraised is because the lender wants to make sure that if they end up repossessing the house through a foreclosure (because people didn't pay their bills or pay their monthly fee) that they are going to be able to sell the house for what they loaned against it. So the house is being used as security for that loan. So the lender will tell the appraiser to go out and appraise this property because they are getting ready to loan some money on it and they want to make sure that they don't loan so much that it can't be sold. I caution people to never use the word "worth" because house can be "worth" $100,000 based on what you put into it, but it might only sell for $75,000 in that neighborhood. So what I caution people to say instead is "what have other buyers been willing to pay for a house like this in this neighborhood," because other buyers sort of determine the market.

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