Getting a home appraisal is a vital part of the home buying process. When a borrower goes to purchase a home, their lender uses an appraisal to determine whether the house their borrower wants to buy is worth the cost. In short, an appraisal is an estimate made about a property’s value, based on elements like its location, structural condition and features. Ultimately, a lender will use the appraisal to figure out how much mortgage they’re willing to provide a borrower. Like a borrower, a lender is also investing in a home, and the appraisal process helps prevent them from putting their money into a property that’s worth less than they’ve paid.
Appraisals are done by individuals called home appraisers, who conduct walkthroughs of properties while taking notes of anything that could possibly affect their value. These appraisers are qualified, licensed contractors typically hired by lenders. During the appraisal process, the appraiser will usually take photographs and sketch out the layout of a real estate property while looking for any safety code violations.
A home appraisal should not be confused with a home inspection, as they are completely different things. A home appraisal simply calculates the value of a piece of real estate, while a home inspector seeks out issues that may affect your house in the future. However, even though appraisers and inspectors are looking for different things, an appraiser won’t ignore a problem they run into. If leaky plumbing or any other issue catches their eye, they’ll likely request an inspection.
The actual house appraisal takes just a few hours, but the entire process may take up to a week or two. The cost of the appraisal depends on a number of factors, including property value, location, and the size of the property. Either the buyer or seller pays for it the cost of it (usually at closing), and it typically runs around several hundred dollars.
Another type of appraisal, a “drive-by appraisal,” pays less attention to a property’s details but costs significantly less. In this situation, an appraiser will literally drive by a home instead of touring the inside, then researches records of the home to come up with their calculations. However, most lenders will not accept this kind of appraisal, but it’s worth asking your lender if they will.
Along with a home’s structural integrity, location, and amenities, a variety of other factors go into its value determination, including the number of bedrooms and bathrooms, square footage, floor plan flexibility, recently sold, similar real estate in the area, and health and safety problems.
Can you do anything to help improve the appraisal process? Not really, but there are some measures you can take beforehand if you’re a home seller. Ensure your property is looking as sharp as possible to help your appraiser understand its potential. If you have a nice home but have paint peeling off the walls, old furniture in the backyard, and a layer of leaves floating in the pool, the appraiser is likely to value it lower than they would if things were tidied up. Appraisers are human—they’re privy to opinions and biases. Take advantage of those. Do everything in your power to make things look as nice as possible. Additionally, be sure to note any repairs or remodels made to the house over the past few years – those may help you out.
In the end, a home appraisal is just another step in the long journey that is the home buying process. If gone smoothly, it shouldn’t be anything for either party to worry about. No matter if you’re a buyer or seller, having a strong grasp on each part of the home buying process can only bode well for you.