Home values are constantly in flux. Market values increase, decrease, or stabilize. These changes can happen daily, weekly, monthly, or over an extended period of time, based upon that particular market area. There can even be spots within the same city that are doing one of each, at the same time. Due to these changes, there is a need to determine current values for properties, which is why lenders hire appraisers when working on a new loan. The lenders want to be able to assess the risk of loaning a certain home.
To assist the lender in this decision, they hire an appraiser to “evaluate” the property. It is then up to the appraiser to come to an objective opinion of value – Uniform Residential Appraisal Report. The appraiser will select comparable properties and make adjustments based upon the condition and features of those homes. NOTE: The lender’s appraisal is not used to determine market value, it is used for the lender to verify the security for the amount of the loan.