Understanding the appraisal process, and how property value is determined, can not only be confusing, but also may open the way towards challenging “short appraisals.”

According to an article in The Seattle Times, “Appraisal lowdown,” it’s best that buyers start with a clear understanding of that all-important number as it relates to financing a property.

For starters, an ‘appraisal’ reflects the value in acquiring property financing, and is not related to a property’s estimated market value—your local, county assessor will use that figure to calculate your property taxes.

Today, in an effort to bring more objectivity to the appraisal process, federal regulations have made certain that home buying and the “lending process” are kept separate from the appraisal itself.

What’s more, “new restrictions” are in place that limit “contact between the lender and the appraiser;” furthermore, stricter requirements are in place when it comes to comparables.

“Usually they require four to six comparables within a certain geographic range. Foreclosure sales have made the process even more difficult because appraisers must (consider) that the comparable was a distressed sale.”

Worried about that ‘short appraisal”?  Here’s a summary for both the buyer and seller on how to “protect yourself:”

Appraisals and Buyers

· Ask your lending people to use an appraiser who knows your county…or at least a close-by county.

· Does your appraiser have a ‘residential-appraiser certification’ ? If not, what other designations does he have that points to his ongoing education in his field.

Appraisals and Sellers

· Go to the website, the Appraisal Institute to check for qualified appraisers, and get the appraisal before you put your property on the market.

· Above all, be realistic when it comes to setting that price.

Lenders must now tell the home buyer that they can receive a free copy of the appraisal, as well as copies of any other reviews, any computer evaluations and all other data used to compute the final report.

Looking to buy in Tower Grove East or Holly Hills? Whether you’re a buyer or a seller, and regardless of your preference, contact us. We know the St. Louis area!