By Ilyce R. Glink (Special to Freddie Mac)
The bursting of the housing bubble in 2008 led to a wave of regulations and the rise of appraisal management companies (AMCs) in an effort to shield appraisers from pressure to deliver anything other than a home's actual value. The AMCs are intended to act as middlemen between the appraiser and the other parties in a home sale.
Instead of hiring an appraiser directly, lenders contract with AMCs to assign one to value a property. After viewing the house and surrounding area, the appraiser sends the lender a report assigning a value to the home based on his or her analysis of the property and the sales prices of recently sold comparable houses in the same neighborhood.
The appraisal value is critical to sellers – who want the highest price – and buyers who want the price they offered and know their mortgage lender will finance. Regardless of which side of the transaction you're on, it's essential to know how to look out for your best interests.
Here are some tips for navigating today's appraisal process:
"If there really is an error, 99% of appraisers will want to fix it," said M. Lance Coyle, a Dallas-based appraiser and a past president of the Appraisal Institute, "even if it doesn't change the valuation of the property."
For more information on appraisals, see "Getting the Property Appraised" on My Home by Freddie Mac®.
Follow this series just in time for the spring homebuying season.
Ilyce R. Glink is an award-winning, nationally-syndicated consumer finance columnist and the author of 13 books on real estate and money. She is also the CEO of Think Glink Media, a digital content agency.
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