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June 15, 2020
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, the home appraisal ensures the sale price is appropriate for the property.
If you still have questions, don’t worry, you’re not alone. Here are some of our most frequently asked home appraisal questions.
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, like us, are assured the amount we 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.
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.
An appraiser is examining the condition of all things permanently part of or attached to the home. This includes the home’s age, square footage, lot size, and location. They are also looking at interior and exterior features including but not limited to walls, floors, the foundation, roofing, and landscaping. Cracks, damages, leaks and code violations will also be considered.
Keep in mind: an appraisal is not the same as a home inspection. An appraisal is typically ordered by the your mortgage company and pertains to value while a home inspection is typically arranged by the buyer and informs the buyer of the home’s condition and its existing and potential problems.
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.
In short, because mortgage companies require one! To ensure that we meet underwriting and investor requirements, we must ensure that the value of the home securing the loan is enough to support the loan amount. We do this by comparing the appraised value against the agreed-upon sale price.
The physical appraisal can take one to several hours depending upon property characteristics, but 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.
If you’re actively selling your home, there are fairly simple ways to make improvements such as fixing blemishes like leaky faucets and cracked ceilings. You can also improve your curb appeal by cleaning up overgrowth, repairing broken fences and repainting your garage door. Check out our article on 8 Easy Ways to Add Value to Your Home for more tips!
You should also document home improvements, the year you made them and the cost of each.
No surprise, the appraisal is a critical piece of the home buying and selling process, but you don’t have to go into it blind. Check out our articles for more useful information on buying and selling a home.