Check your understanding

Check your understanding of key concepts before moving to the “Do it yourself” section.

Indicate whether each statement is True or False.

1. The appraiser uses one method, the comparable sales comparison, to determine a fair price for the subject property.

Correct! An appraiser’s report relies on several techniques to determine value, but the most common and important means of valuation involves the assessment of comparable properties.
Incorrect. An appraiser’s report relies on several techniques to determine value, but the most common and important means of valuation involves the assessment of comparable properties.

2. Banks can issue a loan on a property before they have received an appraisal confirming its value.

Correct! Unless banks have received an appraisal confirming a home’s value, they are forbidden by law to issue a loan on that property.
Incorrect. Unless banks have received an appraisal confirming a home’s value, they are forbidden by law to issue a loan on that property.

3. The only thing on an appraisal report lenders care about is whether or not the values match those listed on a purchase offer.

Correct! If the report states that values in your market are “declining” it may affect the bank’s decision on your loan. Talk to your lender about what is expected of an appraisal, and what the lender’s current policy is regarding the amount of money you may borrow.
Incorrect. If the report states that values in your market are “declining” it may affect the bank’s decision on your loan. Talk to your lender about what is expected of an appraisal, and what the lender’s current policy is regarding the amount of money you may borrow.

4. The buyer is typically expected to pay for the home inspection.

Correct! The buyer is usually expected to pay for the inspection, which varies depending on the size of the home, and what the inspection will cover. Inspections usually cost between $500 and $1000; the cost of not doing a home inspection (and not catching major structural or other problems with a home, can cost you hundreds of thousands of dollars.)
Incorrect. The buyer is usually expected to pay for the inspection, which varies depending on the size of the home, and what the inspection will cover. Inspections usually cost between $500 and $1000; the cost of not doing a home inspection (and not catching major structural or other problems with a home, can cost you hundreds of thousands of dollars.)

Practice what you learned Do it yourself

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