On investment properties, the appraisal report will often use the income approach to determining value. This approach looks at comparable properties in the area, and compares the income each property produces to come up with a value.

When originating a mortgage loan, the lender looks at risk factors in two basic areas; the borrower and the collateral. The appraisal report is a very detailed document that provides the lender with almost all of the information that is needed to make a proper risk assesment of the loan's collateral.

The appraisal report helps determine the value of a property, which in turn will help in determining the LTV, or Loan to Value, of a property. The LTV of a property is calculated by dividing the appraised value of a home and the amount being financed, or the loan amount, of a home. This will determine your LTV. Therefore, the appraisal report is a crucial part of financing a home.

The comparable sales approach is determined by recent sales of similar homes in the area of the subject property.

Don't always judge a book by it's value, currently, many lenders are doing secondary reviews of legal, valid appraisals and cutting their values...The value on an appraisal is not written in stone nor is it something the broker or appraiser can control once submitted to a lender...Your loan may need to be resubmitted to a new lender if value is cut below value needed, current borrowers should be forewarned of this trend in the industry...