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What to Expect Throughout the Home Appraisal Process

Young couple cooks in their kitchen with few worries about their home appraisal process.
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How to Prepare for a Home Appraisal

When it comes to a home’s sale price, real estate agents and inspectors play a heavy hand — but the home appraisal largely impacts the winning digits. Appraisers are certified state professionals who provide an unbiased evaluation of a property’s value.

Though the specifics and circumstances of appraisals can vary, here’s what can generally be expected before, during, and after an appraisal conducted as part of the home buying process.

Before the Appraisal Begins: Who Hires the Appraiser?

In most cases, the mortgage lender initiates the appraisal before they’ll approve a loan for the borrower, or prospective homebuyer. The appraisal helps the lender understand the value they’d be left with in the event the borrower can no longer make loan payments and the property forecloses. Because appraisers serve as a neutral party, the lender typically selects them, as opposed to a buyer or seller who has skin in the game. Appraisers must have zero affiliation with the parties involved, as well as follow certain standards to prevent any conflicts of interest.

Who Pays for the Appraisal, and How Much Does it Cost?

However, just because the lender hires the appraiser, it doesn’t mean they pay. It just means it’s a prerequisite for borrowing money. The borrower, or potential buyer, is usually responsible for covering the appraisal costs, which can run $300-$400 for a single-family home, according to Angie’s List. However, some sellers may offer to pay for the appraisal as part of the negotiation. Regardless of who pays, the cost is nonrefundable if the home sale falls through.

During the Appraisal: What Criteria Will the Appraiser Assess?

During their visit, which can range anywhere from 15 minutes to several hours depending on the property size, the appraiser will take note of the following:

  • Total square footage of home and size of the lot
  • Number of bedrooms and bathrooms
  • Location and amenities of the home
  • Condition of the interior and exterior
  • Upgrades made to the home since the last sale

They’ll use these criteria, along with research of comparable homes, to produce their valuation.

What will the Appraiser Specifically Look for in a Home’s Interior and Exterior?

Overall, the appraiser will look for any signs of damage, such as wood or water. On the exterior, they’ll examine foundational elements, such as the home’s roof, gutters, and siding. Indoors, they’ll review the condition of doors, walls, windows, ceilings, and foundation. Appraisers take pictures and record measurements during their assessment.

Though appraisers remain impartial on a home’s style and decor, they will take into consideration any interior and exterior upgrades made that add value to the home. For this reason, it’s best to present the appraiser with a comprehensive list of upgrade costs and dates.

How Does a Property Appraiser Differ From A Home Inspector?

A property appraiser shouldn’t be confused with a home inspector. A home inspector scrutinizes every area of the home, informing the prospective buyer of any potential issues, safety concerns and extensive future repairs that could affect their decision to purchase it. The property appraiser simply evaluates the home’s current condition and its role in the overall valuation.

What if the Appraisal Comes Back Lower Than the Listed Price?

The property appraisal typically comes after the home is listed and inspected. Why? Negotiations between the buyer and seller could include repairs or upgrades found necessary in the home inspection, which could impact the appraisal value that follows.

What if, once appraised, the home is said to be worth less than it was listed for? Again, the bank wants to understand the home’s value so it’s not loaning more than the home is worth — which means they won’t loan the difference if the home appraiser estimates that the home is a lower value than its list price. If this occurs, buyers can pay the difference on their own, pursue a second appraiser’s opinion, or negotiate a lower purchase price along with closing costs and repairs.

When can you Expect to Receive the Appraiser’s Report and How Long is it Relevant?

The appraiser will use their in-person evaluation and comparable market analysis to compile a report. The appraiser will deliver the report to the lender as soon as a few days or as long as a few weeks. Buyers can usually obtain a copy from the lender, the keeper of the original document. Sellers are not entitled to a copy of the appraisal but can request a copy. Depending on the lender and loan, the appraisal can remain relevant anywhere from 90-180 days.

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