If you’re borrowing money to buy a home, chances are, there’s going to be an appraisal involved. Since the bank is going to be lending, they want to make sure they’re putting their money toward a good investment, and that you’re not going to be borrowing more than the house is worth — an appraisal is a lenders way of protecting themselves.
That being said, it’s good for the homeowner, too. An unbiased appraiser will be able to give an accurate idea of a home’s value based on factors like market trends, selling prices for nearby homes, overall valuation, square footage, amenities, condition, and more. In some cases, this can affect the sale price of a home, and with any luck, actually decrease the value (though the opposite can sometimes be true).
One point to keep in mind — in almost all circumstances, the appraiser is chosen by the lender. While there are laws protecting consumers from unscrupulous entities, it always pays to do some background research, not just on the lender, but on the person actually being hired to do the appraisal. That being said, don’t lose too much sleep on it. In terms of the appraisal, the lender is on your side. After all, both you and the lender want you to buy the home, and both you and the lender need to make sure that the home is worth purchasing at the price that is set.
At the end, you and the bank will receive a complete report that comes after a visual assessment has been completed, and after market and trend information has been gathered. Most often, this process can take place without the prospective home buyer being present, but it can’t hurt to check with your lender to see if you can be present (it certainly can’t hurt!).
A quirk of the appraisal process is that the goal is to uncover the market value of the house. Since you have already agreed to a price for the home, you have essentially created the market with your purchase offer, and that offer is often the defacto market value. So, the appraisal often agrees the home is worth exactly what you are paying for it.