Getting an appraisal on a prospective new home is vital. A reputable appraiser is a professional hired to determine the value of the new home based on the price set by the sellers. To come up with the value, the appraiser will look at other homes within the same vicinity that are of the same size, age, and sometimes, condition. For the lender, the appraiser’s information is crucial, helping the lender know how much money you would be lent. After all, the lender’s goal is to protect him or her just in case you should run into financial difficulties and not be able to pay.
Therefore, the lender will work closely with the appraiser, depending on this individual to be an unbiased third party. For his or her work in looking at the potential house, he/she is paid a fee for services rendered, unlike a real estate agent who makes money based on a commission. Because of this, his/her report is completely balanced between buyer and seller since there is no vested interested in either side. That way, the seller is only responsible for real things wrong with the house but the buyer is protected.
Keep in mind that the work performed by the appraiser will vary somewhat depending on the type of home you purchase. For instance, if the appraiser were appraising a series of new homes that are all much the same, then he/she would go through the same process repeatedly, following a standard list. However, if you have built a custom home, whereby a construction loan was required then the appraisal changes. In this case, the appraiser would need to look at drawings and specs in addition to the home. In other words, he/she would not be able to assume the home was the same as the last home inspected.
If you were building a home, the appraiser would inspect the home during the process. Then when the home is completed, another inspection would be performed. This way, the appraiser can make sure there are no major changes or surprises. For example, if you were buying a 3,000 square foot home, then you paid the builder for each square foot. Let us say you paid $150 per square foot but at the final inspection, the appraiser finds the completed home to be 200 square foot short. While this might not seem much, it means a $30,000 refund to you as the buyer…quite substantial.