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The need for accurate and unbiased property value arises as it is the most important in terms of credit risk management. Before a lender approves a loan application for a homebuyer, an accurate property value will be required to determine the loan amount, the loan-to-value ratio that helps to decide the degree of homeowner equity which is a key determinant of borrower credit risk. An independent appraisal is generally required for home buyers added to a home sales price and used to calculate the principal collateral.

Home buyers are becoming more confused with the rising need of their home value to be approved for financing. Home buyers are still contemplating between a home appraisal and the Automated Valuation Model, they find difficulties in knowing which is better and more accurate than the other to get an unbiased value for their property.

Although some may think that lender-required appraisals are biased because they are ordered through the lender, there is no bias. Typically, an appraisal is ordered through an automated service and the lender does not have direct communication with the appraiser at all. That is to remove any bias that may have been formed.

Automated Valuation Tools are helpful when your start your inital home search, but an official appraisal is always the way to go to make sure the house you are buying is worth the price you are paying.

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