Home Appraisal Explained: How Lenders Verify Property Value
A home appraisal is an independent assessment of a property's market value by a licensed appraiser. Lenders require appraisals to ensure the property is worth the loan amount.
What You'll Learn
- What appraisers look at
- How comparables are selected
- The difference between appraisal and inspection
- What happens if the appraisal is low
- Appraisal waivers (PIW/ACE)
The Full Explanation
Appraisals are ordered and managed by CTC Processing on day one of every file. CTC follows up with the AMC regularly and reviews every appraisal for condition issues and comparable selection.
Frequently Asked Questions
What does a home appraiser look at?
The appraiser evaluates: property size (GLA), condition, location, age, and improvements — compared to recent sales of similar properties in the area. Each difference from the comparables is adjusted for.
What is the difference between an appraisal and a home inspection?
An appraisal determines value for lending purposes. A home inspection identifies defects and mechanical issues for the buyer. They serve different purposes — both can reveal problems that affect the transaction.
What is an appraisal waiver?
An appraisal waiver (PIW for Fannie Mae, ACE for Freddie Mac) is when the lender's AUS system approves the property value without requiring a physical appraisal. CTC checks for waiver eligibility on every conventional file at DU/LP submission.