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December 30th, 2009 3:31 PM

Are you concerned that the price you write on the sales contract for purchase of the house, condominium, property for business use or investment, is more than it's worth?

Well fear not, if are seeking financing!! Why?

The independent appraiser has no allegiance to buyer, seller, broker, lender, etc. Their only concern is to determine what is the property's Market Value.

Market Value, as defined by the Appraisal Institutes's Dictionary of Real Estate Appraisal, Fourth Edition and used in this appraisal is:

"The most probable price, as of a specific date, in cash or in term equivalent to cash, or in other precisely revealed terms for which the specified property rights should sell after reasonable exposure in a competitive market under all condition requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress."

Additionally, Market Value is defined by Title XI of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) as:

"The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

  1. Buyer and seller are typically motivated:
  2. Both parties are well informed or well advised, and acting in what they consider their own best interests;
  3. A reasonable time is allowed for exposure in the open market:
  4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto, and;
  5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

A clarification of the definition of market value, by the Uniform Standards of Professional Appraisal Practices (2002 Edition) is as follows:

"A type of value, stated as an opinion, that presumes the transfer of a property (i.e. a right of ownership or bundle of such rights) as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser and applicable in an appraiser."

So, if the appraisal does not agree with what your real estate broker tells you to pay or, for what ever reason, you perceive to offer as a purchase price, the appraisal will act as your "parachute" to renegotiate or back out of the deal if the appraised value is less than the agreed upon purchase price.

However, if you are still set on proceeding with the purchase because you feel this property is more valuable to you than it is to another buyer, the appraisal will only affect your purchase, if at all, with the lender by requiring a small addition to your down payment.

Of course, if you are a cash buyer then the appraisal only comes into play if your contract states that you require an appraisal and should appraisal not agree with the purchase price, you have the right to halt the deal. 

That being said, the Appraisal is your best friend when purchasing.

If you have any questions about this process, please visit my website:  

If you would like to contact me, I can be reached by email at 





Posted in:General
Posted by Garry Nusinow on December 30th, 2009 3:31 PMLeave a Comment

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August 7th, 2009 12:36 PM

When you apply for a mortgage loan, an appraisal management company (AMC), selects the real estate appraiser from its list of real estate appraisers. Most of these appraisers are independent contractors who have agreed to a fee that is much less than a more experienced and qualified appraiser would charge to perform the appraisal. Yet, the fee that is charged to you is on average more than 100% the appraiser's fee. This appraiser chosen off the appraisal management companies list has often never done an appraisal in your neighborhood. As of May 1, 2009, this is the new code of conduct system that is in place.

It should be noted, that FHA appraisals, appraisals for JUMBO loans, REAL ESTATE TAX APPEAL appraisals, DIVORCE appraisals, ESTATE (date of death) appraisals, COMMERCIAL appraisals, DO NOT fall within this new code of conduct and you, your attorney, mortgage broker, lender, etc. can use the appraiser of their choice. 

The real estate appraiser is not an afterthought. They are the most important part of the valuation process.

If you have any questions about this process, please visit my website:  

If you would like to contact me, I can be reached by email at 



Posted in:General
Posted by Garry Nusinow on August 7th, 2009 12:36 PMLeave a Comment

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