My home is worth HOW much?

An appraisal is simply the estimated current market value of a property as determined by a professional appraiser. The value is usually determined by comparing the property to similar properties sold in recent months, or ones currently on the market (these are known as ‘comps,’ or ‘comparables‘). There is also generally an inspection of the property (although an appraisal does not substitute for a home inspection).  

A home appraisal is usually conducted for a bank, county or individual when a home is taxed, insured, obtains financing or is sold, or there is a mortgage refinancing request and the lender wants to be certain of the current value of the property. Vast changes in the home value could also trigger different requirements for mortgage insurance. Appraisals are also necessary if you need a value determined for divorce proceedings.

If you enter a purchase agreement for a home and the mortgage lender determines that the appraised value is less than the offered price, the loan will not be granted.

In such a case, the buyer and seller must re-enter negotiations over the purchase price. If no agreement can be found, the buyer will have to search for a different home.