Updated: December 22, 2024
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A home appraisal is an expert valuation that determines the property's market value and affects mortgage approvals and refinancing for buyers and homeowners.
Home appraisal costs and duration can be influenced by property size, overall condition and high demand in active markets.
To prepare for a home appraisal, clean your home thoroughly and make minor repairs. Have documentation on any home upgrades or unique features ready for review.
A home appraisal is an unbiased estimate of a property's market value, typically performed by a licensed professional. Whether buying a new home or refinancing an existing mortgage, an appraisal ensures the lender that the loan amount matches the home's worth. We break down everything about home appraisals — from what impacts them to preparation tips — so you can approach this process confidently.
What is a home appraisal? It's an impartial process used to determine a home's market value. The appraiser starts by visually inspecting the home's interior and exterior, assessing its condition, layout and unique features.
After the inspection, the appraiser compares the home to recently sold properties. This step helps capture market trends and ensures the valuation reflects comparable home prices.
Some appraisals, like drive-by appraisals, only involve an external review. These are quicker but less thorough and may be used when full access isn't required or feasible.
This analysis determines the home's value by considering size, condition and location. The final report aims to provide an accurate representation of its market standing. It's important to remember that not all appraisals are equal, and you should be sure you trust the provider before using their services.
A home appraisal and a home inspection serve different purposes. An appraisal estimates the market value of a property, which is usually a requirement when securing a mortgage. For example, if you're buying a house, the mortgage lender uses the appraisal to confirm the loan amount aligns with the home's value.
A home inspection, however, looks for underlying issues like plumbing or roof damage. If a buyer learns during an inspection that the roof needs repairs, they can negotiate the price or ask the seller to fix it. While appraisals focus on value, inspections ensure the property's condition.
A home appraisal is needed to assess a property's market value in various situations. Whether you're purchasing, refinancing or settling a legal matter, appraisals provide an unbiased value to meet different needs.
A home appraisal is needed when securing a mortgage to make sure the loan matches the property's true market value.
Lenders use an appraisal when refinancing your mortgage to confirm the home’s current value before changing your loan terms.
An appraisal helps lenders verify your property’s worth before approving a home equity loan or line of credit (HELOC).
Appraisals accurately value your home and help fairly divide assets between partners during a divorce.
Knowing the home’s value ensures clear and fair distribution to beneficiaries.
Appraisals can be used to contest property tax assessments if you believe your home’s value is lower than stated.
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A home appraisal involves a few key steps to determine the property's market value. Here’s how to go through each step smoothly:
Your bank typically arranges the appraisal after an accepted offer or new loan application. This ensures compliance with regulations.
If applicable, choose a certified appraiser familiar with local property trends.
The appraiser inspects the property on-site or remotely, taking 15 to 30 minutes for smaller homes and longer for larger ones.
They evaluate recent sales data and public records to determine value.
The report is sent to your lender, and you're entitled to a copy. Check for accuracy and raise any concerns promptly.
An appraisal report is a detailed document used by appraisers to estimate a home's market value. It is often based on the Uniform Residential Appraisal Report by Fannie Mae for single-family homes. The report includes descriptions of the property's interior and exterior, neighborhood analysis and comparisons to nearby sales.
The report features a street map, a building sketch, photos of the property and comparable homes. It also explains the appraiser's value analysis. It incorporates relevant data like public records and tax information to support the final value conclusion.
Understanding how much a home appraisal costs depends on various factors. For single-family homes, fees typically range from $300 to $500, but prices can reach $800 or more depending on the property and location.
Appraisals for multi-family properties or unique homes can exceed $1,500. Appraisers spend time inspecting the home, analyzing comparable sales and writing reports, which can increase costs based on complexity.
Appraiser fees are partially regulated to be fair and appropriate for the market under the Dodd-Frank Act.
A home appraisal can take a few days to a couple of weeks. The inspection usually lasts a few hours, while analyzing comparable properties and writing a detailed report may require one to two weeks. High demand in active housing markets can delay scheduling and extend the total time.
The cost and duration of a home appraisal depend on various factors that can affect the overall process. Understanding these elements helps set expectations for timeframes and expenses.
Larger homes take longer to inspect and require more detailed reporting, increasing both cost and duration.
Custom elements, like a home theater or high-end finishes, need extra analysis, impacting time and cost.
Remote or hard-to-access properties can add travel time and complexity.
High-demand periods may delay scheduling, extending the overall duration.
Homes in poor condition may require more detailed inspections and documentation.
Properties with guest houses or outbuildings take longer to assess and may incur higher fees.
Factor | Impact | How to Address or Mitigate |
|---|---|---|
Deferred Maintenance | Indicates potential hidden issues and lowers perceived value. | Fix minor repairs and ensure the home appears well-maintained. |
Outdated Interiors | Reduces appeal compared to modern homes and lowers value. | Upgrade key areas like kitchens or bathrooms if possible. |
Structural Issues | Raises concerns about safety and costs for future buyers. | Address any foundational or structural repairs before the appraisal. |
Neighborhood Factors | Location affects comparables and market desirability. | Highlight local amenities or recent neighborhood improvements. |
Curb Appeal | A poor first impression impacts the initial appraiser evaluation. | Maintain the lawn, clean the exterior and enhance landscaping. |
Various factors can negatively impact a home appraisal, affecting the final value assigned. The table below highlights these key issues, why they matter and how to address them for a better outcome.
After the home appraisal is completed, the final report is sent to your mortgage lender. The lender uses this value to confirm whether the sale price aligns with, exceeds or falls below the appraised amount, and they review the loan details accordingly.
This review may add conditions to the loan, which can delay closing. Once any updates are made, the mortgage underwriter assesses the entire loan file to determine approval. If approved, you set the official closing date and complete the homebuying process.
You can renegotiate the sale price with the seller or provide additional comps to the lender for reconsideration. If needed, explore other loan options or challenge the appraisal.
Select a state-certified appraiser with extensive knowledge of your local market. For added confidence, check their credentials and reviews.
You can challenge it by presenting new or overlooked information, such as recent comps, to your lender. The lender can then request a review from the original appraiser.
Yes, appraisers evaluate both the interior and exterior to assess the property's overall condition, layout and unique features that affect its value.
Home appraisals are typically valid for three to six months. Updating is needed if the market changes significantly or has been more than this period.
Delays can occur due to high market demand, difficulty scheduling the inspection or complexities like unique property features that require additional research.
About Zachary Romeo, CBCA
Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.
Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.
