The value on an assessment notice may vary quite a bit from a mortgage or real estate appraisal. One reason for this may be the timing that the assessment was done; versus the appraisal just done reflecting the most recent value based on the current market conditions.
An appraisal provides you with a document outlining an estimate of a property’s current fair market value. Since an appraisal and an assessment are not definitively connected, most lenders will require as a condition, that an up to date appraisal be performed. Lenders use this valuation to base the size of mortgage they are comfortable lending.
Appraisers are highly regulated and provide unbiased valuations who take into consideration the property, home, location, conditions and many other external factors such as nearby amenities and access to public transportation. Some lenders will provide a list of approved appraisers they accept.
It is most often the borrower that is responsible for the cost of the appraisal, which upon completion will be sent directly to the lender. The lender is getting assurance that they are making a good investment for the value of the subject property.
Even though the borrower has paid for the appraisal, they are often now allowed to look at the report –although usually a consolidated version – until after closing. The appraiser performs the report following the parameters defined by the lender. It is the choice of the lender to allow the borrower he see the report. Reason for this strict access on the lenders part is to avoid the borrower taking the report to multiple lenders in search of the best deal.
Some lender may offer to refund the cost of appraisal after funding your mortgage.
Preparing for an Appraisal
- Appraisals do include pictures of the exterior and interior of a property, so clean up and consider the curb appeal of your property.
- Make sure to note all upgrades that you have done and the costs associated to assure they are not overlooked.
Look for any small repairs that may affect the value and make repairs before the appraisal is done; it is likely that the appraiser could over estimate the cost, thus having a significant effect on your value.