An appraisal is the valuation of your property by a professional appraiser to determine the value of your home in comparison to the current market trends. Most lenders want to see a professional appraisal of the property you want to buy before sanctioning the loan to ensure that the selling price is in accordance with the current market value of similar homes. This way, the lender is confident that he is not lending a sum that is much more than the value of the home.
The cost of the appraisal will vary according to the complexity of the appraisal and the time taken to complete it. Appraisers use a number of techniques to establish the value of a property. Some look at comparable homes sold in the past six months, adjusting the prices to reflect differences between these homes and the property being appraised. If several similar homes have recently sold, the appraiser’s work is fairly simple. If your home is situated in a rural area, or in a neighborhood where there is mixed development the appraiser’s task is more complex.