Getting a mortgage to pay for your new apartment? Bring on the appraisal! The bank or lender will require this crucial step before they commit to offering you a loan.

Does the Appraiser work for you?

No. You cover the cost of the appraisal, but they’re really acting as an impartial third party for the bank. The bank or lender wants to make sure that they’re making a smart decision by lending to you. If you default on the loan, the lender takes possession of the unit and sells it. Should this situation occur, the lender wants to make sure that they will make their money back.

Appraisers must pass certification and are licensed through the state. They tour the property, note interior and exterior points that will factor into valuation, may take photos, look at the amenities in the building, and consider comps. They do all of this to appraise the real world value of the property.

Remember when we talked about finding comps? All of those points that go into finding a good comp—location within the neighborhood and building, layout, type of building, furnishings, monthly costs, etc.—are going to help an appraiser figure out the value.

The appraiser doesn’t have any skin in the game themselves—they’re offering a neutral third-party opinion on what the property is worth.

HELP! I'm not happy with the Appraisal!

If you feel that an appraiser has really missed the mark, perhaps due to not knowing the area, you have a couple courses of action.

  1. Contact the lender and request a second appraisal. The lender won’t toss the first appraisal, but they may entertain a second go at it and factor both into the decision. But remember—the buyer pays for the appraisal fees.
  2. Find a different lender and try again. This can be tough, but sometimes starting fresh is worth it.