Perennial Funding > Blog > Uncategorized > Why Does a Home Buyer Need to Get a Real Estate Appraisal?

Why Does a Home Buyer Need to Get a Real Estate Appraisal?

First time home buyers may believe that a mortgage pre-approval and funding are the primary items to that are needed to get the title to a house. While both functions are extremely important, other items are also necessary to complete a successful purchase transaction. Perennial Funding provides helpful support and insight into the home buying process.

What is a Real Estate Appraisal?

A real estate appraisal is a report that establishes the market value for land, residential properties and for commercial properties.

Prior to funding a home loan, mortgage lenders generally require a Uniform Residential Appraisal Report from a state-licensed real estate appraiser.

The home value within the report is based on a comparison of nearby properties that are similar in size, style and condition to the subject property (home that borrower is buying).

Who Orders a Real Estate Appraisal for a Purchase or a Refinance Transaction?

A mortgage lender will typically order an appraisal for purchase or refinance transactions. Although, a real estate appraisal might be ordered by a homeowner for other reasons, such as for a divorce proceeding or to determine the value of an estate.

Is a Home Buyer Required to Pay for a Real Estate Appraisal?

A lender-ordered real estate appraisal is generally paid for by the home buyer. On a Good Faith Estimate and a HUD-1 Settle Statement, the charge for an appraisal is usually displayed among other items that reflect the home buyer’s closing costs.

However, in certain cases, the home seller, mortgage lender or the home builder might agree to pay for the cost for the appraisal.

Who is the Beneficiary of a Residential Real Estate Appraisal?

In cases where the home buyer pays for the appraisal report, the borrower would be entitled to receive a copy, upon request.

For the mortgage lender a real estate secured property serves a collateral for the home loan. Prior to funding a mortgage loan, the lender will ensure that the property is valued at an amount that equals or exceeds the amount of the home loan.

Although, a home buyer might have a hunch about the value for homes in certain neighborhoods, a real estate report from a state-licensed appraiser provides an unbiased reflection of a property’s true market value.


Home buyers may visit a variety of informational website sites that provide online valuations for real property. However, some of the reported values could be as much as 30 percent incorrect, or greater.

Working with a knowledgeable and a courteous mortgage professional is the best way to get details about obtaining a home loan.

Perennial Funding provides real estate financing resources and tips for first time home buyers. Contact us today for more information about applying for a mortgage loan.

Get a free Pre-Approval!

NMLS #247954
Click here for the Perennial Funding NMLS access page.

Perennial Funding LLC, 161 Washington St. Suite 950, Conshohocken, PA 19428

Loan programs are subject to credit approval. Other terms, conditions, restrictions and fees may apply. All of the information on this website is published in good faith and for general information purposes only. Perennial Funding does not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information on our website is strictly at your own risk and we will not be liable for any losses and damages in connection with the use of our website. The content in this website should not be construed as a mortgage loan commitment. From our website, you can visit other websites by following hyperlinks to these sites. While we strive to provide only links to useful and ethical websites, we have no control over the content and nature of these sites and the links to other websites do not imply a recommendation for all of the content found on these sites. Please be aware that when you leave our website, other sites may have different privacy policies and terms, which are beyond our control. Thank you for visiting Perennial Funding's website.
*By refinancing your existing mortgage your total finance charges may be higher over the life of the loan.

© Copyright 2015 Perennial Funding LLC All Rights Reserved.