I'm buying a house, do I need an appraisal?

This is a question I am asked quite frequently. Like a lot of questions in real estate, it depends. Let me explain. There are some situations where an appraisal is not required. For example, if you are paying cash for a home, whether it's an investment property or a home you are going to live in, you are not required to have an appraisal. I do recommend having one though so you can get a professional second opinion of the value of the property you are buying.

If you are financing the purchase, whether it's a conventional loan, FHA, VA or USDA Rural Development, some sort of appraisal will need to be done. The prospective homeowner will pay for the appraisal but will not get to select the appraiser. Usually the financing institution will select from a pool of approved appraisers.  There are many regulations in effect now that try to make sure the appraiser is independent from the rest of the parties involved in the transaction. This seems to work but sometimes creates problems with appraisers coming in from out of state, but that's another story.

When a buyer is paying cash for a property, an appraisal is highly recommended to make sure the property is worth what the buyer and seller have agreed to.

So, I think it's a great idea to have an appraisal even though you will rarely have any control over the appraiser, but that's not always a bad thing.