Appraisal

An appraisal is an independent, professional opinion of a home's market value, prepared by a licensed appraiser and ordered by the lender before it finalizes your loan. The lender uses it to confirm that the home is worth enough to secure the mortgage, since the property is the collateral. The appraiser inspects the home and compares it to recent nearby sales to arrive at a value. An appraisal differs from a comparative market analysis: a comparative market analysis is prepared by a real estate agent to help price or offer on a home and is not a formal, lender-accepted valuation. If an appraisal comes in below the agreed price, the gap can affect your financing, sometimes triggering renegotiation or an appraisal-gap arrangement between buyer and seller.