Getting an Appraisal, do I need one and who will pay?

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Getting an Appraisal


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Before your mortgage is approved, the bank wants to check what you are buying. There's a good reason for this. The bank uses your new home as collateral on the loan, so they want to make sure the home is worth what you are paying for it - and consequently worth what they are lending to you.

The appraisal covers three basic topics: the state of the house itself (to see if there are any defects), the price of the home relative to other recent sales in the area and whether there are any claims against the house that the seller has not mentioned. This last condition is met by running a title report to see if there are any liens or other claims that could prevent the sale of the home.

Essentially, the appraisal ensures that the home is worth what you are planning to pay and that no hidden surprises will jeopardize your ability to use the house as collateral for your mortgage. The appraisal is not free, and you will be expected to pay the fee, which is usually a few hundred dollars but can vary with the size and location of the home.