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.