When you purchase a home, the price you pay for the home is determined by an agreement between yourself the buyer and the seller of the property. A property appraiser is the person who does the appraisal and they provide an independent 3rd party perspective to the market value of the property outside of the people within the transaction.

If you are requiring mortgage financing for the home, the property becomes the collateral for the loan.  Lenders will request an appraisal on the property, which is a cost to you the buyer usually around $300-$400 for a full appraisal. If you are putting less than 20% down (insured)– the mortgage default insurer will value the property and unless the property is outside of an major residential area, very unique in some way or is being sold by owner- it is unlikely you will have to pay as the default insurer will cover the cost.

An appraiser uses a few different techniques to finding the market value of the property, and each lender has specifications on what the appraisal is to include based upon the scope of their lending policies. Your mortgage broker will order the appraisal from a list of approved appraisal companies specific to the lender who is financing your mortgage. You can expect the appraisal to take a couple of days once it is ordered as the appraiser has to get into the property, and then complete the appraisal notes. Often the finished appraisal will take 24 hours before it is complete and sent to the lender. Though the cost is to the borrower, the appraisal actually belongs to the lender so most buyers don’t even get to see the paperwork. Your broker will let you know what the value came in at. On occasions where the property value comes in less than the purchase price it is important to know that the lender will use the appraisal as the value of the home and it will be up to the buyer to come up with the difference between the purchase price and the appraisal value.

Property appraisals can be acquired for a variety of needs outside of mortgage lending, such as valuing property for inheritance, for relationship separation, for when property has been damaged, during the building stages of a property and so on.