Real Estate Term of the Day: Appraisal

Real Estate Term of the Day: Appraisal

APPRAISAL – a professional opinion or estimate of the value of the property.  Also, the act or process of estimating value  (Barron’s Dictionary of Real Estate Terms)

In the State of Colorado, an appraisal is specifically done by a licensed appraiser by the state.  This is not to be confused with a CMA (Comparative Market Analysis) which can be performed by a licensed real estate broker by the state.

A few reasons an appraisal would be conducted:

  1. When a buyer is financing a new home for purchase, the buyer’s lender will in most all circumstances order an appraisal to be done on a home
  2. If a homeowner is refinancing a home, most lenders will require an updated appraisal to be done
  3. To help determine a reasonable offering price in a sale
  4. Determine the property value for estate tax purposes or tax purposes
  5. Allocate the purchase price to the land and improvements
  6. Determine the amount of hazard insurance to carry

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