The Mortgage Appraiser is sent by the bank to find out the value of the property. The Bank wants to make sure that the property is worth the value that you claim it is worth. The bank wants to check that there are are no problems with the property, no illegal construction and that there is nothing that will cause any financial damage to the bank if they lend you this money.
The cost of the appraisal is paid for by the potential borrower. The value of the property is determined by 2 factors, the appraisal and the contract purchase price.
The bank will fix the value of the property using the lower amount of either the appraiser’s value or the contract price.
For example –
If the contract price is 1.2 million shekels but the appraiser values the property at 1.3 millions shekels, the bank will value you the property at the lower rate of 1.2 million shekels.
If the contract price is 1.1 million shekels but the appraiser values the property at 1 millions shekels, the bank will you the property at the lower rate of 1 million shekels.
In what circumstances do you need a Mortgage Appraiser ?
After you sign at the bank for a new mortgage and you sign the purchase contract, the bank requires to get an Appraisal of the Property. The bank provides you with 3 different appraisers to choose from. The cost of an appraisal will cost between 500 -1500 shekels depending on the value of the property. If the property is very expensive, or a self build, the cost of the appraisal can cost 3000 shekels and more.
If the property was bought from a Kablan ( a developper) there is no need for a Mortgage Appraisal. The purchase contract is sufficient.
After you sign at the bank for a remortgage, the bank requires a property appraisal in order to check the value of the property. If there is illegal construction then the appraiser will calculate how much it will cost to restore the property to it’s original state, and will deduct that from it’s value. Sometimes, it is possible to not have to do the appraisal if the property is less than 4 years old. However it is advised to the appraisal , because if the value has gone up that you can take out more finance on the property.