The most important element that the appraisal report provides is the market value of the property. This element is the main difference between the appraisal and building inspection, which focuses the property's structure and mechanical equipment.
To compare the descriptions contained within this article with an actual appraisal report, please go to the sample appraisal report.
The appraised market value determines the LTV and consequently limits the amount of money that an applicant may borrow on a property. This appraised value normally is a reconciliation of at least two or three value calculation methods.
After obtaining the necessary data for the above valuation methods, the appraiser will then arrive at a best estimate of value. This final estimate is the appraisal value, which is determined through a reconciliation of the different value approaches.
Appraisers are not supposed to produce appraisal reports for the purpose of meeting specific valuation goals set by the party ordering the report. However, most appraisers will inform the loan officer if preliminary estimates show that the appraised value will fall below the contract price or loan target. In such a case, the full appraisal order can be canceled.
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