ORDERING AN OFFICIAL REAL ESTATE APPRAISAL
Part of the home buying process might include ordering an official appraisal to help place an appropriate worth on the property you are thinking of buying. The property appraisal will be conducted by a licensed appraiser in your area.
If you are borrowing money from a lender in order to purchase residential real estate, your lender may require that you order and pay for a home appraisal before your lender agrees to loan you the money needed to purchase the property.
If your lender does requires that you order and pay for an appraisal of the property that you are considering buying, don’t be alarmed, as this is normal procedure in most states.
KEEPING THEM HONEST
In 1989, Congress passed a bill mandating that all states initiate a licensing program for real estate appraisers. The basis for passing the law was to help eliminate and prevent fraudulent and inflated property appraisal reports, which has an immediate affect on real estate prices. It has been written that the real estate bubble was helped along with inflated property appraisals.
The bill has not been without its critics though. Some in the industry have cried that a licensing program will not eliminate fraud and will only increase the costs associated with property appraisals. There are arguments on both sides of this issue.
THE BOTTOM LINE
If you are borrowing money to finance the purchase of residential property, chances are your lender will require an official appraisal of the property you are trying to buy, and this appraisal will need to be conducted by a licensed professional.
Licensed residential property appraisers are now required to adhere to a set of ethical and professional guidelines developed by the Appraisal Foundation.
Excerpt from: Hiring a Licensed Home Appraiser