After the inspection, the appraiser locates both the sales activity and current listings in the area from real estate databases and prepares a written report. The report indicates the value of the property and summarizes the important aspects of the valuation process. Sometimes, appraisals are completed without the physical inspection and the value of the property is based solely upon the market approach. After the appraisal is completed, the consumer is normally entitled to a copy of the appraisal from the lender. During the loan processing, lenders require that a title search be performed on the property which will reveal the legal description , the owner of record , and outstanding liens and encumbrances on the property.
Liens are items such as property taxes, mortgage loans, and judgments.
Encumbrances may be road maintenance agreements, right of way and utility easements. Usually, a plot map or land survey is prepared as part of the title search to show the location of the improvement on the property. After the search has been completed, the title company will prepare a written document that reflects their findings and delivers the report to the lender. This report is commonly called a preliminary title report. After the loan is closed, the title company will prepare a title policy that reflects the new mortgage loan as a lien on the property.