Home Appraisals: Basics, Requirements and Ordering

Posted by goBE Realty Daybreak on Tuesday, December 14th, 2021 at 7:45pm.

There are several important steps that take place during the homebuying process, and one of these involves the professional, objective evaluation of the value of a given property. This is known in the real estate world as the appraisal process, and it's one that all buyers should be aware of as they begin scouring the market. 

At Daybreak Living, we're happy to walk our prospective buyers through all the important parts of the process if they're looking to purchase any of our homes, condos or townhomes for sale in Utah. This includes all the valuation elements that may go into your process, such as appraisal. What is appraisal, why is it required, and what are some other important details to be aware of? We'll go over everything in this two-part blog series.

Home Appraisal Basics

Simply put, a home appraisal is the estimate of a home's market value. It is a professional, third-party evaluation intended to determine the price a property would fetch if it were sold on the open market. Appraisals will typically be required for any home that's sold, refinanced, or has a home equity line of credit opened against it.

During the appraisal process, an appraiser will visit the property and take into account a variety of factors in order to come up with their estimated value. These can include recent sales of comparable homes in the area plus numerous other factors (more on this below).

Why Appraisals Are Required

Mortgage lenders are always looking for ways to minimize their risk of taking a loss, and appraisal is one method they use to do this. By requiring all homes being purchased with a mortgage to undergo an appraisal, they can be sure that the property is worth at least as much as the mortgage they're lending on it.

If a home ends up selling for less than the amount owed on the mortgage, the lender can then pursue the homeowner for the difference. This is known as a "deficiency judgement" and it can be pursued in court on behalf of the bank.

To avoid this, some homeowners will opt to pay off their mortgages in full before selling their homes rather than take on the risk that they'll sell for less than what's owed and face a deficiency judgement. As such, some lenders may be more reluctant to lend on properties that are "under water" (i.e. the current market value of the home is less than what's owed on it) or those where there's an existing first mortgage against which they cannot draw on equity.

Who Orders an Appraisal?

In nearly every case, your lender will be the one who orders the appraisal. There are a few rare exceptions where you may need to do this yourself, but these are so infrequent that we'll leave them alone here.

For more on home appraisals, or to learn about any of our homes or condos for sale in Utah, speak to the staff at Daybreak Living today. 

About the Author:

Utah Dave - Neighborhood ExpertUtah Dave - Daybreak Neighboorhood Expert and Local Resident

My friends nicknamed me Utah Dave in high school because they said it didn't matter where we went in Utah, I would know how to get there and who we needed to talk to. The name sticks today as UtahDave has formed into a professional real estate network of Neighborhood Experts all across the state. I live in Daybreak with my wife and 4 amazing children. I enjoy dancing (which is how I met my wife Dawn) as well as traveling, coaching, and learning.

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