When applying for a mortgage, most lenders require a professional home appraisal to determine the fair market value of the property. This is done to ensure that the loan is adequately secured and that the lender is not taking on too much risk. Before an appraiser arrives, there are a few things you should know. By law, an appraiser must have a state license to perform appraisals related to federal government transactions.
Additionally, you have the right to receive a copy of the full valuation report from your lender. In most cases, a full valuation is required for a refinance. However, in some states such as North Carolina, a broker's opinion on pricing can be used for other purposes than approving a mortgage. If you have an FHA or VA loan, you may be eligible for a simplified refinance that doesn't require an appraisal.
Lenders use in-person appraisals to protect themselves from lending more money than the house is worth. If they lend too much money, they could face a greater financial loss if buyers don't pay back their loans. A broker's pricing review can cost significantly less than an appraisal, according to the National Association of Broker Price Opinion Professionals. Lenders may also use a broker's price opinion instead of an appraisal to estimate the value of a home for refinancing, foreclosure, or short selling.
Both price opinions and broker appraisals are based on real estate market data and the informed opinions of real estate experts.