When is a formal appraisal ALWAYS required?

A formal appraisal is always required when the lender wants to sell the mortgage to the secondary market. This is because a lender needs to ensure that the value of the property securing the mortgage is accurately assessed and documented, as it directly impacts the risk associated with the loan and, consequently, the lender's ability to sell that mortgage. In the secondary market, investors are much more cautious; they require assurances about the value of the underlying assets.

In contrast, while refinancing or selling a property for cash may involve an appraisal, it is not inherently required. Homeowners may choose to obtain an appraisal when refinancing, but it is not mandatory under all circumstances. Similarly, a cash sale might not necessitate an appraisal, particularly if the buyer and seller agree on the price without one. Finally, while loans exceeding $250,000 often do require an appraisal, it is not a blanket rule, since some lenders may not mandate appraisals for all loans regardless of amount. Therefore, the situation with respect to the secondary market creates a consistent requirement for formal appraisals, grounded in the need for proper valuation and risk assessment.