During the course of your transaction, your lender will order an appraisal on your behalf. A real estate appraisal helps to establish a property's market value–the likely sales price it would bring if offered in an open and competitive real estate market.  Most appraisals cost between $400 and $500.

Your lender will require an appraisal when you ask to use a home or other real estate as security for a loan, because it wants to make sure that the property will sell for at least the amount of money it is lending. If you are paying cash for your property, it is your choice as to whether or not to hire an appraiser.

Your appraiser must be licensed in Georgia and should be familiar with the area where you are purchasing.  The lender may use an appraiser on its staff or it may contract with an independent appraisal contract company.  The appraiser will report on details about the subject property (the one you are purchasing) along with a side-by-side comparison of at least 3 comparable properties. Current mandates dictate that at least 2 of the properties included in the report must have sold within 90 days of the appraisal date. Appraisers attempt to find properties close to the subject property--i.e., in the same school district or real estate area. They will typically start with a radius of about .5 mile and go outward until they find comparable properties.  

While appraisers are NOT home inspectors, they will notate any serious flaws in the property, such as a crumbling foundation sor serious hazards. This could affect the value of the home and the willingness of the lender to loan money on the property. This is especially true on FHA or VA loans, in which certain repairs are required to be made in order for the loan to close.

Due to past fraud, appraisals have been increasingly scrutinized, leading to the passage of the HVCC, the Home Valuation Code of Conduct, an attempt to "help enhance the integrity of the home appraisal process in the mortgage finance industry." Instead many have complained that the HVCC has caused problems throughout the industry, leading to unfairly low appraisals and other issues. The industry hopes that the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in July 2010, will help alleviate some of the new problems with appraisals and appraisal management companies. For more information, please read "Real Estate Appraisal Rules Changing."