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The major log jam in today’s real estate market is valuation difficulties. Banks are having a hard time confirming the purchase amount meeting up with the actual value of any given home. This causes a bottle neck in the amount of money they can loan out due to processing times being extended. Just to make sure what they are loaning on is worth the amount they are loaning, banks hire appraisers.

An appraisal is designed to use local market trends to validate the purchase price of a home, or to invalidate it. Ideally the bank would want to make sure that the home they are lending money on, and may have to take back in the event of a foreclosure, is worth the money so they can recoup any loses they may have on the loan.

Any can be trained to be an appraiser but there are many certifications for different kinds of appraisers. Most people are familiar with residential real estate, but there are certifications for land appraisers, commercial appraiser and even industrial appraiser as well.

The appraisal has to be a neutral valuation, no matter the certification, so that the best interest of the client, which is the bank, is best served. If this is violated then the appraisal has to be reviewed or thrown out altogether.

In the event that an appraiser can prove that the home is not worth the amount of the purchase, the buyer either has to come up with the difference for a down-payment or cannot get financing for the home. In most cases, the buyer simply would walk away and not complete the transaction. But, without an appraisal the bank can frequently be stuck holding the bag.

Either the asking price must be reduced or the buyer will put down a larger down payment to offset the valuation shortfall.

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