The property seller sets the price, especially for residential property, not the appraiser. Sellers usually don't order an appraisal because they want to obtain the highest price for their home and therefore don't want to be bound by the appraiser's assessment.
The real estate agent receives a percentage of the price as compensation and often represents the seller in the transaction and assists them in setting the sale price. They perform a Comparative Market Analysis (CMA), which real estate agents in most states are allowed to perform without an appraiser's License or Certification. The CMA is vital to the agent’s preparation for a listing examining recent property sales in the neighborhood to arrive at a listing price. Typically the agent will suggest a price to the seller based on the CMA, however, the seller may choose to list their property for a higher price.
Regardless of the price at which the seller lists the property, an objective, unbiased value of the property will be needed by the lender. This is where an appraisal comes in.
An appraisal is an estimate of a property's fair market value. It's a document generally required (depending on the loan program) by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. The appraisal is performed by an "appraiser" typically a state-licensed professional who is trained to render expert opinions concerning property values, its location, amenities, and physical conditions.
Obtaining a loan is the most common reason for ordering an appraisal. However, there are other reasons to get one:
There are three common approaches, or methods, used by appraisers to establish property value. After reviewing the result of each of the three methods, a final valuation is entered by the appraiser. For single-family, owner-occupied properties, the Sales Comparison Approach is by far the most-used method.
Technically, the mortgage company owns the appraisal even though the borrower paid for it. This is because the mortgage company orders the appraisal on the borrower's behalf, and the appraiser lists that mortgage company on the report. Under Federal law, the borrower has the right to receive a copy of the appraisal report (usually delivered as a PDF).
Short answer: Yes, usually. In most cases, you will not have to pay for another appraisal if your loan application is moved to another lender. Depending on the type of loan program, the first lender can transfer it to the new lender. Some appraisal firms may charge a small fee due to a little clerical work required to reflect the new mortgage company. If the appriasal is completed and you subsequently change the type of loan program for which you are applying (e.g., was conventional loan then changed to an FHA loan), you could pay a smaller fee for the appraisal to be usable for the new program. In some cases, however, you might have to pay for a new appraisal.
If asked, it's to your advantage to help the appraiser perform the assessment by providing additional information:
Fill out our Quick Quote on the right and one of our specialists will contact you. No credit check needed.