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What is an appraisal and who completes it?

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Appraisals are an official assessment of a home's value, not a friend's guess (but that sounds like an awesome game show). Property appraisals help lenders like M&T Bank confirm the property's value. By having an unbiased third party figure out the value, a lender can then do the math to figure out how much is required for a down payment.

Professional appraisers follow guidelines for assessing a home's value. In addition, many states require that appraisers are licensed or certified to do business. When appraisers conduct property appraisals, they prepare an extensive, official document that includes a written assessment of the home or neighborhood, and typically photographs and measurements.

Appraisers also research sales history in the area, the age and sales history of the particular home you love, and then look at “comps,” or comparable homes in your area. Comps are recently sold homes, located in the same or nearby neighborhood(s), with similar features such as square footage, number of bedrooms, size of the lot, etc. This makes sure that your home isn't over- or under-valued.

Depending on your home and your loan program, the appraisal might include an inspection of the interior of the home, or it might just be an assessment of the exterior along with recorded sales history in the area.

As a buyer, you're permitted – in fact, encouraged – to review the appraisal. You can view it during your loan closing, but you can always review it earlier if you'd like. It's kind of cool to get an official dossier on your home; its strength and weaknesses and how it can improve its character. Ask your loan adviser for a copy.