An Appraisal is required any time that money will be loaned against a property. Its main purpose is to indicate to the Lender that there is adequate value in the asset (home) to cover their investment risk.
However, an Appraisal can be quite different for a New Purchase versus Refinancing.
In general, the process looks the same. The Appraiser looks at Comparable properties according to a list of general criteria and chooses 3 recently sold and 3 active homes that are the most similar to the ‘target’ home.
For whatever reason, in our experience, a refinance almost always carries a higher Appraisal value than you would see on the same house at the same time for a purchase. The reasons for this are unknown (or likely known only to those within the Appraisal industry), but its important to be aware of.
If you have refinanced within the last few years, take that value with a grain of salt. It is likely a good deal higher than Market Value or the current Appraisal Value if you were to sell. Sellers are often married to a value that is unrealistic and it can be frustrating to come to terms with the actual value if it differs substantially from what you’ve been planning on.
Best suggestion – let our Team show you what the market is doing today and how your home compares. It is the very best way to ensure that you have an accurate picture and are setting yourself up for a successful sale.