Kari Phillips with Southern Fidelity Mortgage was back with a special guest, appraiser Vance Randall and shared some great information on the appraisal process with our listeners.
Vance explained that an appraiser’s job is to analyze and report the market. He went on to give an overview on how they determine a property’s value which includes:
1. Type of home
2. Factors determining the location of the property
3. Comparables (recent sold properties that are similar to subject property)
Vance expressed the idea of simple supply and demand, interest rates and availability of money as being the driving forces behind home values. It is also important to note that the type of sale affects the valuation – distressed sales have to be weighted and evaluated a little differently than traditional sales.
Kari also outlined the relationship between the lender and the appraiser. The lenders used to be able to pick an appraiser and assign them to a file to complete the valuation. Today, there is a panel of appraisers that are approved by the lender and the appraiser is chosen from that panel randomly by the loan processors. With the autonomy of the appraisers in today’s market, the lender and appraiser can still talk about the facts of the property but there is less pressure on the appraiser to “bring in the value” and they can more easily concentrate on evaluating the market data and provide a fair and unbiased valuation for the client.
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