A New Jersey property appraiser, we have heard, has the job of protecting the bank. This is an absurd statement, in our opinion. I believe that professional appraisers actually live and work in order to protect the public trust. They chose to be in this industry in order to generate reports that show the true value of a property. They adhere to the Uniform Standards of Professional Practice (USPAP).
So, why is there a common opinion that the appraiser’s job is to protect the bank? Our guess is that it’s because of the fact that a professional new jersey property appraiser recommends repairs after performing a thorough appraisal of a home. Some people might think that appraisers are doing so because they want to make sure the property is sufficient as collateral for the loan.
What some property owners don’t know is that it is the bank underwriter that has the final approval of the loan. The underwriter uses the report submitted by the appraiser in order to assess whether the value of the property is truly worth the price.
A Deeper Look at Real Estate Valuation
Real estate valuation is the process of determining the value of your property according to various factors such as location, gross living space, the year it was built, and structural conditions. If you are planning to refinance your current mortgage loan, you will need the services of a property appraiser. The bank could handle this for you, but you will still have to shoulder the expenses.
Real estate valuation, however, is but one of the many factors that an underwriter takes into account when approving or denying a loan. Banks and lending institutions follow certain guidelines in terms of property conditions before releasing funds for the loan. There are benchmarks that have already been established in the industry. Your loan may be denied if your property does not pass the industry benchmark for the structural or aesthetic condition.
Other Factors Affecting Your Loan Approval
Often, underwriting software is used to determine your probability of default on your home loan. The software uses your personal information such as credit score, credit history, income, and assets to generate a decision.
When your property does not meet the minimum requirements according to the guidelines, an honest, professional appraiser will naturally label the appraisal report for a repair. When the appraiser labels your property as “subject to repairs,” it will need to undergo further inspection before the loan is approved.
Banks and lenders will not approve a loan on a home with defects especially if such defects are likely to be harmful to its occupants. This is because a decrepit property has more risks of both liability and repayment than one that does not need repairs. The property appraiser actually helps property owners make sure that their loans are approved by the bank by advising you to make repairs that will boost your property’s value.
If, however, you doubt the validity of your property’s initial appraisal, consider hiring a second appraiser. RDC Appraisals have professionals with the highest integrity in the industry since 1990. Contact them today to get a valuation consulting service at a reasonable price.