what is an appraisal 
an appraisal is a valuation of property such as real estate a business collectible or an antique by the estimate of an authorized person the authorized appraiser must have a designation from a regulatory body governing the jurisdiction of the appraiser appraisals are typically used for insurance and taxation purposes or to determine a possible selling price for an item or property understanding appraisalsappraisals are used in many types of transactions including real estate if a home valuation for example comes in below the amount of the purchase price mortgage lenders are likely to decline to fund the deal unless the prospective buyer is willing and able to come up with the difference between the appraised value and the lender s financing offer the transaction will not go forward the appraiser can use any number of valuation methods to determine the appropriate value of an item or property including comparing the current market value of similar properties or objects appraisals are also done for tax purposes when determining the value of charitable donations for itemized deductions deductions can reduce your taxes owed to the irs by deducting the value of your donation from your taxable income 1appraisals can also be a helpful tool in resolving conflicts between heirs to an estate by establishing the value of the real estate or personal property to be divided types of appraisalsa home valuation is necessary during the process of buying and selling a home as well as a refinance of an existing mortgage a refinance is when a loan or mortgage is reevaluated and updated to current interest rates and new terms an appraisal determines the home s value to ensure that the price reflects the home s condition age location and features such as the number of bathrooms also valuations help banks and lenders avoid loaning more money to the borrower than the house is worth in the event of default when the borrower can t make the payments anymore the bank uses the appraisal as a valuation of the home if the home is in foreclosure whereby the bank takes possession of the house it must be resold to help the lender recoup any losses from making the mortgage loan it s important to remember that when a bank lends for a mortgage it gives the full amount of the home s value to the seller on the date it s sold in other words the bank is out the money and in return has a promise to pay plus interest from the borrower as a result the valuation is important to the lending process since it helps the bank avoid losses and protect itself against lending more than it might be able to recover if the borrower defaults a home appraisal is separate from a home inspection which is completed to determine the condition of the home and identify any potentially serious issues before a buyer moves forward with closing professional appraisals can be done for many items including collectibles antiques or grandma s silver ideally you ll want multiple valuations for an item from an accredited professional appraisers might charge an hourly rate or a flat fee a certified appraiser s valuation will likely be fair and unbiased whereas the local collectible shop has an incentive to offer you less for the item also owners can get an idea of an item s value by checking collectible magazines and online appraisal websites most websites charge a small fee such as 10 to value an item of course obtaining a value online is done through photos of the item and is not an official valuation but it should give you an idea of what it s worth before proceeding if you decide to pursue an appraisal the american society of appraisers has thousands of members and is a great place to begin searching for an accredited professional 2some types of insurance policies also require appraisals of goods being insured homeowners and renters insurance policies protect policyholders against the loss of personal property due to theft or damage these blanket policies cover items up to a preset dollar limit obtaining an appraisal of the contents of a home creates an inventory of the owner s property and establishes its value which helps to ensure a swift settlement if a claim is filed 