Your home is oftentimes your most valuable asset. It’s not only a place where you and your family can congregate and enjoy your time together; it’s also an investment.
Let’s say, you want to either refinance your mortgage at a lower rate or sell it to try and make a profit. Or, perhaps you’re trying to purchase a new home. Before applying for refinancing, listing your house on the market, or buying a house, you’ll need to get a home appraisal.
What Is a Home Appraisal?
A home appraisal is an objective and professional analysis of a home’s value. An appraisal consists of information based on different aspects including what’s in the home (like the floor plan, amenities, and how big it is), a visual inspection, real estate trends in your area, and how much nearby homes in your area sold for.
Generally, an appraisal will be completed when someone is buying, selling, or refinancing a home. It will tell a homeowner whether or not the price they’re putting on the home is fair based on the condition of the home, its amenities, and its location.
Home appraisals will let those buying a home know if a home is a good price. If you’re refinancing, it shows the lender that you, the borrower, aren’t receiving more money than the home is actually worth.
According to a National Association of Realtors study from January 2020, appraisal issues led to 18% of real estate contract delays , so it’s important to get the appraisal right the first time around.
How Much Does a Home Appraisal Cost?
The home appraisal cost is typically several hundred dollars, and the borrower will most likely be responsible for paying it. However, the seller will cover it in some circumstances.
For instance, they may want to get the appraisal and see what modifications they can then make to increase their home value when they’re ready to sell it, or if they’re going to sell their home to a family member, to guarantee that the parties involved are getting a fair price.
Most people can expect to pay at least $450 to $550 for a home appraisal, but it could be higher if depending on the specific property.
For example, if you live on a lake or you’re buying a home on a lake, you can expect the home appraisal cost to be more.
If the appraiser is inspecting a larger home and/or a bigger overall property, then the home appraisal cost will go up. The same applies to jumbo loans, which are usually given to borrowers purchasing big luxury homes.
The cost of a home appraisal covers things like the appraiser’s training, licensing, insurance, and expertise. It also covers the time it’ll take for the appraiser to assess nearby sales and market trends as well as conduct a visual inspection.
You’re paying for the appraisal report, which will show how the appraiser came to their conclusion on the price and information about your home.
At the end of the appraisal, if it comes up lower than the amount for which you want to refinance or sell it, then you may need to work out a new deal with your lender or purchasing party.
What Is the Home Appraisal Process?
The home appraisal process may seem complicated, but trained appraisers will be able to explain it to you and guide you through every step.
Generally, the home appraisal process happens after an offer on a house is accepted and within a week after an inspector has toured the home if it is being sold. Sellers have the option, should they wish to pay for it, to do a pre-listing appraisal. This can prevent the seller from having to work out the price with every prospective buyer.
Generally, the lender will seek out a third-party appraisal management company to come up with an objective analysis of the home and the appraisal estimate.
The lender will determine the cost of the home appraisal, and usually the borrower will be responsible for covering the expense.
The actual appraisal can take as little as 15 minutes or up to several hours depending on how big and complex the home is.
The appraiser will usually bring a form to collect information about the home including things like measurements, nearby housing trends, the demographics of the neighborhood, the condition of your home, and how it fits in with your area.
The appraiser will also review things like the home’s location, quality of construction, parking situation, exterior condition, how old it is, its structure, the quality of the siding and gutters, and the square footage.
They will also research the appliances, health and safety factors, the number of bedrooms, bathrooms, and kitchens in the house and how old they are, and the code compliance.
The appraiser will usually take photos of the home as well as make notes. Homeowners don’t have to be there for it, but if they are present, try to avoid getting in the way when the appraiser is taking photos or interrupting them while they’re trying to concentrate.
The appraiser may ask you questions about what has been done with the home to get a more accurate report. If the homeowner doesn’t don’t want to be there for the appraisal, the real estate agent can fill in to answer questions that may come up during the appraisal.
After the appraiser finishes, they’ll put together a report, which is generally delivered within a week to 10 days–but it could always take longer.
Along with looking at information on recent sales nearby and market trends, the appraiser may need to check that you had permits to make upgrades, which could delay the process.
When you receive the report, it could be anywhere from less to 10 pages up to 100 pages long. It’ll show details about the home as well as local properties that are similar to it.
If the appraised value is around the same price as listed, then the sale could close shortly after that. If it’s lower than expected it may be necessary to get in touch with the lender to show them comparable homes in the same neighborhood.
One option could be to print out a list of similar homes in the community and show that they were valued at a higher price than your home. You may have the option to appeal the appraisal, just note you’ll likely need to support your argument and the appraiser may not change their appraisal.
Each lender may have different criteria for formally disputing an appraisal, so should there be an issue, contact the lender to review their policies. In most cases, only the lender can request a second appraisal.
You may not even need to contact the appraiser if you’re willing to negotiate with the buyer, seller, or lender. They may be flexible on the price; all you have to do is ask.
Home Appraisal Checklist
Before getting a home appraised, there are a few things you can do to help the process go smoothly.
First up, decluttering. Think things like storing clothes and items in closets and drawers, organizing clutter in storage bins, and taking donations to your local Goodwill or thrift shop.
Thoroughly clean the inside and outside of the home, including the yard. Break out the cleaning supplies or hire a professional cleaning team. The goal is for the house to be spotless.
It’s also a good idea to repair any cracks in the wall, paint over paint that is peeling, take loose nails out of the walls, and make any other visual repairs that may need attention.
Test the lights, faucets, ceiling fans, and security system, as well as confirming that the windows and doors open and close easily. Run appliances like the oven and dishwasher as well to guarantee there are no problems.
Other items to consider checking off your list might include trimming hedges, getting rid of cobwebs, cleaning the gutters, pulling weeds, and mowing the lawn.
Adding plants or flowers could help add some curb appeal to the house. If there is a patio and/or pool area, clean up any outside furniture and power wash the surrounding concrete, fences, and walkways.
Since the appraiser will be walking outside, avoid watering the grass on the day of the appraisal. This can help avoid mud or dirt being tracked through the house.
If you have pets, you may need to make a plan for them. Consider putting them in a designated room or taking them to a family member or friend’s home during the appraisal. Also, double check that there are no fleas or other insects in the house.
In terms of paperwork, consider writing down a list of all the upgrades that have been completed on the home and attach permits and receipts detailing how much it all cost.
It can also help to research comparable homes in the area; an agent will be able to help with that.
Right before the appraiser arrives, consider doing one last light cleaning.
Ensuring You Get the Best Appraisal Possible
Whether you’re buying, selling, or refinancing a home, a home appraisal is a key part of the process. Knowing what to expect with the process can help ensure it goes as smoothly as possible and could help you feel more comfortable with the process.
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