11 Frequently Asked Home Appraisal Questions

Read Time: 5 Minutes

|

January 20, 2022

Topics:

What to Expect During a Home Appraisal

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 answers to some of our most frequently asked home appraisal questions.

Hand drawing house on whiteboard with list of property value factors

The Home Appraisal Process

You may be wondering, how is an appraisal and appraiser scheduled? While you as the borrower are typically responsible for paying the appraisal fee, the lender typically orders the appraisal on your property – alleviating the legwork in that regard on your end.

For your home appraisal, a qualified appraiser is assigned to your property. The appraiser selects recent home sales of comparable size, utility, condition, and location.  While the appraiser determines your home’s worth based on a thorough evaluation of the interior, and exterior of the property, taking note of the square footage, number of bedrooms and bathrooms, any value-boosting features, repairs needed, and more, many borrowers aren’t aware that the appraisal is also determined by sales comparison and current market trends.

 

The Appraisal Report

An Appraisal Report is a detailed document including observations made by the appraiser to determine the home’s value. Many appraisers follow Fannie Mae’s Uniform Residential Appraisal Report for single-family homes.

So, what’s in an appraisal report?

  • Square footage details
  • Photos of the property and its surroundings
  • A map of the property’s street
  • Comparable sales (with photos)
  • A sketch of the home
  • Condition of the plumbing, electrical, and HVAC systems
  • Public land and tax records
  • And more!

It’s important to note that depending on the appraiser, and sometimes loan type, the appraisal and process may look a little different. Generally, though, the reports are similar in their conclusions.

 

Home Purchase Appraisal vs Refinance Appraisal

Whether you’re purchasing or refinancing a home, an appraisal is a huge determining factor when it comes to the amount borrowed. For instance, when you’re purchasing a home, if the home appraisal comes in at a lower value than the purchase price of the home, a lender typically won’t lend a higher mortgage amount than what the home is appraised for. The same goes for refinance appraisals.

For refinances, an appraisal is crucial for lenders because it shows how much money home equity a borrower can borrow against. If the current value of your home is less than the original loan’s principal (meaning you’re underwater on the mortgage and owe more on the home than it’s worth), refinancing is not typically an option. Additionally, if the equity in a home is less than 20%, lenders generally require the borrower to pay for private mortgage insurance (PMI) and/or offer less competitive interest rates.

 

Home Appraisal FAQs

What is a Home Appraisal?

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.

How Much Does a Home Appraisal Cost?

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-$700. The appraisal cost could be included with your closing costs, although some lenders may require you to pay for it up front.

What Do Home Appraisers Look For?

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 mortgage company and pertains to value while a home inspection is typically arranged by the buyer and informs them of the home’s condition and its existing and/or potential problems.

Who are Licensed Professional Appraisers?

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.

Why Do I Need a Home Appraisal?

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.

How Long Do Home Appraisals Take?

The physical appraisal can take anywhere from one to several hours, depending on property characteristics. However, 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.

How to Prepare for a Home Appraisal 

If you’re actively selling your home, there are 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 landscape 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.

What Will Lower my Home Appraisal?

An appraisal will determine your home’s lendable value, so the more up-to-date and well-maintained a home is, the higher its value will be. On the flip side, according to Investopedia, the factors below may lower the home appraisal:

  • Deferred maintenance
  • Dated or undesirable finishes
  • Not being up front about needed repairs
  • Comparable properties that are “outliers” (e.g., sold to relatives, under duress, or a foreclosure)
  • Market conditions
  • Appraiser experience

What if I Disagree with my Appraisal?

While it’s common for homeowners or homebuyers to disagree with the home value determined by a professional appraisal, it’s not particularly common for appraisers to change their opinion of value. For example, a homeowner can write a letter of appeal to the lender, who can then file an official Value Dispute. The Value Dispute is sent to the AMC to make the appeal to the appraiser. Providing alternate recent closed sales or any factual errors could support a chance to increase the value. However, the appraiser would have to justify why their opinion of value was changed. So, while it is possible to dispute an appraisal, more often than not, a report remains unchanged unless there is concrete proof of an error in the appraisal report. 

What if my Offer is Greater than the Appraisal?

You made an offer on a home, the seller accepted, and then the appraisal came in lower than expected compared to the purchase price. Again, lenders do not typically lend borrowers more money than a home is worth, so if your offer is greater than the home appraisal, your journey to closing may be delayed. In this instance, you have a couple options to try to keep the purchase on track. You can ask the seller to lower the price based on the appraisal, or weigh whether getting a second opinion is worth it to you.

What if my Offer is Less than the Appraisal?

If your offer is less than the appraised value of the home, then as a homebuyer, you’re in good spot! While the seller may be thinking they did not price their home high enough, your purchase proceeds as planned!


If your offer is less than the appraised value of the home, then as a homebuyer, you’re in good spot! While the seller may be thinking they did not price their home high enough, your purchase proceeds as planned!

Real Estate

House hunting?

Your new home is just a few clicks away.

Find the Perfect Home

Newrez has partnered with XOME to help you find your perfect home. Get started today by clicking the button below!

Search

Why Newrez?

Newrez believes the lending business shouldn't just be about home loans - it should be about homeowners. That's why our employees get to know our customer's real needs, through final closing, and beyond.

  • Industry leading loan options

  • Simple pre-qualifications and application processes

  • Loans for everyone, from seasoned investors to first-time buyers

  • Putting power back into underserved communities