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Q: What is a real estate appraiser's role in the buying of a property?

A: A real estate appraiser's role is to basically determine the value of a property. The purpose of a property appraisal is to see if the property is worth the price a buyer is prepared to pay for the property. The appraisal should make sure it's a fair deal to the buyer and seller and also tells the lender that it's a good value and risk to make the mortgage loan.

An important qualification of the appraiser is to be an unbiased third party to the purchase transaction of the property. They cannot be connected in any way to the buyer or seller, financially or otherwise. The appraiser must strive to make a fair assessment of the value of a property. They must examine the market conditions, comparable sales, condition of the property and pertinent factors to determine their opinion of value. The appraisers are licensed by each state they service which requires them to perform rigorous initial training and continuing education.

The process of making an appraisal is complex. It starts with an inspection of the property and the grounds around it. Following this, the appraiser will tour the neighborhood. In their initial review, they can make a preliminary report on the home and the area around it. However, a more detailed report can take more research and time to prepare. They use lots of resources, including public records and interviews, to piece together a picture of how much the house is worth. All of this information can make a major difference. The appraiser should continue searching until they're satisfied that they can make an accurate appraisal.

For the initial tour of the house, they'll be looking at the condition of the property, updating that has occurred (or lack thereof,) improvements that have been made to it, and the size of the house. Other factors like the yard, the basement or swimming pool will also come into play. They're looking at the present condition as well as history of the property.

Aside from just determining the value of a property, a real estate appraiser can also tell you information about the neighborhood such as much other homes have been sold for or being offered for sale. They can show you things about the house that you might have overlooked such as things that could be a problem in the future. For certain types of loans, such as FHA or VA loans, the appraiser is required to look for certain things that could affect the property. These items include safety concerns, potential health hazards and other issues.

The appraisal report should substantiate the buyer's decision to purchase a house by evaluating the value based upon the purchaser's offering price. Furthermore, the appraiser should give the buyer and the mortgage lender an objective opinion of the property's value. A basic definition of what the value of a property is the price a ready, willing and able buyer is prepared to pay for a property. An appraisal should verify this principle and state the facts to back it up or disprove the buyer's decision.

Get answers to questions you might have about real estate from Randy Durham, who is president of the Chattanooga Association of Realtors and a broker with Keller Williams Realty. His column appears on Sundays. Send your questions to Business Editor John Vass Jr. at jvass@timesfreepress.com

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