Why are appraisals important?
Appraisals are the snapshots in time at which a trained professional indicates his informed opinion of the market value of a piece of property. Lending institutions rely on the appraisal to set the loan limits available to their clients, the buyer. If an appraisal indicates a home’s value is less than the sales price agreed upon in the sales contract, the lender will not be able to complete the deal in most instances because the primary loan amount is always keyed to a limitation of 80% of the lower of the sales price or the appraised valuation. Appraisals provide the basis for that funding ratio. That’s why they are so critical to the success of the transaction.
