What to Expect During a Home Appraisal
The home appraisal. Certainly not the most exciting of topics, but it’s an important milestone in the mortgage process—whether you’re on the buying or selling side of homeownership. One of the last steps required to get a home loan, the home appraisal ensures the sale price is appropriate for the property. But that’s just the tip of the appraisal iceberg! Here’s the full picture of home appraisals, and what to expect during the process.
What is a Home Appraisal?
A home appraisal is a fair and impartial estimate of how much a home is worth. It is used to determine a fair market value for the home, so mortgage lenders are assured the amount they are lending does not exceed the home’s true value. An appraisal is done by a state-licensed professional who is trained to give an unbiased evaluation of the home.
Tell me more about these licensed professional appraisers
The person appraising your home is either from a third-party appraising company or licensed contractor through a state regulatory agency that enforces the Uniform Standards of Professional Appraisal Practice, along with other regulations.
Why do I need a home appraisal?
In short, because your mortgage company requires one! Why? To ensure that it meets underwriting and investor requirements, the lender must ensure that the value of the home securing the loan is enough to support the loan amount. It does so by comparing the appraised value against the agreed-upon sale price (in the case of a home sale).
What are appraisers looking for exactly?
An appraiser is examining the condition of all things permanently part of, or attached to, the home. Translation: they don’t care about décor or furniture. The appraisal is focused on:
- Permanent features: age, square footage, lot size, location, etc.
- Interior conditions: walls, floors, windows and doors, appliances, plumbing and lighting. These are the things that will remain in the house.
- Exterior conditions: foundation, roofing, landscaping, and permanent fixtures (like a pool or sprinkler system). Cracks, damages, leaks and code violations will also be considered here.
Keep in mind: An appraisal is not the same as a home inspection. An appraisal is typically ordered by the lender and pertains to value. A home inspection is typically arranged by the buyer and informs the buyer of the home’s condition and major features, as well as identifying the home’s existing and potential future problems.
Who pays for the appraisal and how much is it?
In most cases, the homebuyer pays for the appraisal. The cost varies depending on the location and type of property, but you should expect to pay between $420 and $700. The appraisal cost may be included with your closing costs, although some lenders may require you to pay for it up front.
How long does the process take?
The physical appraisal can take one to several hours (depending upon property characteristics); the entire appraisal process takes longer. Once the physical appraisal is complete, the appraiser creates a written report of findings, and submits the report to the mortgage lender, usually within 5 to 7 days.
How can I improve my home’s appraised value if I’m the seller?
If you’re actively selling your home, there are fairly simple ways to make improvements:
- Fix blemishes: leaky faucets, broken windows, cracked ceilings, and roof shingles.
- Assess your curb appeal. Things like sprucing up overgrowth, repairing broken fences, and repainting your garage door (if need be) will work in your favor. Make the outside of your home look like a place you’d want to tour.
- Document home improvements. Note updates you’ve made over time, the year you did them, and the cost of each. These improvements can range from a remodeled bathroom to a new oven.
No surprise, the appraisal is a critical piece of the home buying and selling process.
And after the appraisal comes…the closing table! We suggest taking a look at this: The Top 6 Questions Homebuyers Have About Closing.