What Exactly Is a Home Appraisal
An appraisal is the estimation of the home’s value. It is based on an inspection of the property and comparing similar properties in the same area.
You must first obtain a home appraisal before completing your home buying, selling, or refinancing process. This gives you an estimate of the property’s value. An assessment will determine how much a mortgage lender will allow you to borrow to purchase the property.
An appraisal answers the question “How much does my house cost?” and helps protect the buyer from overpaying. Lenders cannot give the homeowner more than the home is worth by denying a refinance or purchase.
Who Assesses the Home Value?
An independent, licensed third-party appraiser should perform appraisals. It’s vital that the home transaction in any way. It ensures that all parties can be confident the market value determined is fair and impartial, without any influence from anyone else.
Although the lender may order the appraisal, the borrower usually pays for it. If either party does not agree to the sale, the appraiser will charge the appraisal fee upfront and out-of-pocket.
How Much Does A Home Appraisal Cost?
According to Home Advisor, most appraisals cost between $200 and $600. The national average is around $335. The cost of an appraisal depends on several factors:
- The home’s size
- Type of home
- The location of the home
- The property’s condition
- How much work and how long it takes
These factors influence the time and effort required to appraise the property, which affects the price paid by the borrower. A larger property or multi-unit property will allow for more room to assess and walkthrough. Comps are difficult to find for unique homes because they often have distinctive features that make them unique.
If your home is located in a new or rural area, the appraiser might have trouble finding a comparable house. That might require more research and take longer.
How Long Does It Take Start to Finish?
The home appraisal process generally takes between the date of inspection and the appraisal report about a week.
Before the lender can order an appraisal of a new property, the buyer must make an offer on the home, accept it, and sign a purchase contract. The appraisal process can then begin.
1. Your Lender Orders the Appraisal
The lender will order the appraisal. After the lender requests an estimate, an appraiser will inspect the property.
2. An Appraiser Visits The House
Your loan type will dictate which parts of your home the appraiser reviews. The appraiser will examine the house to learn more about its features and maintain safety and heat.
Some loans, such as VA loans and FHA loans, might require more detailed appraisal criteria than others. That would allow them to resolve any issues found during the appraisal before the buyer moves into the property. Later in this article, we’ll talk about the different appraisal criteria for loans.
3. The Appraiser Prepares a Report
After the appraisal is complete, the appraiser will examine comps to determine the home’s fair market value. The appraiser will provide the appraisal report is created by the appraiser. It includes a description of the property and all its unique and essential features.
The report could also contain general information about the market, the home’s location, comps, and other information that supports the appraiser’s final valuation and findings. We will send the report to you in a printed copy.
They will approve the loan if the property is appraised at least twice the purchase price. The lender can’t lend more money to the home than it is worth. This article will explain what to do if it happens.
4. Your Loan Terms are Finalized
Once the appraisal has been completed and the purchase price has been set, the lender will finalize the terms of your loan. You’ll receive a Closing Disclosure that details your down payment and closing costs as well as the duration of your mortgage, and then you’ll close on your loan.
This may sound like too much work, but it is not often. In some rare cases, when working with Freddie Mac or Fannie Mae, it’s possible to skip the appraisal process and use a waiver. COVID-19 offers some flexibility and safety precautions.
What is the Lifespan of a Home Appraisal?
A home appraisal can be used for 120 days (4 months) in general. You will need another inspection if you don’t close on your house within the time frame. Some people may be granted an extension. However, only in some instances and only if they are eligible. The VA is an exception. It has a 180-day timeline except for IRRRLs (VA Streamlines) and has a 4-month timeline.
Because market conditions change, an appraisal can only last for a few months. A home sale 6 months ago could be very different than one six months later, especially in a volatile market like real estate.
What do Appraisers look For?
The job of an appraiser is to determine the fair market value of the property. They must look for things that could affect the property’s price or influence the lender’s decision to lend you money to purchase it. These are:
- Safety and health hazards
- The home’s structural integrity
- The condition of your home
- Upgrades and improvements
- Visible defects
- All requirements set forth by the lender
If there are potential problems, appraisers can order any inspections, including a pest or roof inspection. You will need to correct any deficiencies found during the inspection or appraisal before you can move in.
The appraiser might exclude certain rooms from the measurement of a livable area or bedroom count. Basements and garages, for example, are not usually included in the square footage of a home. A room must also have a closet or window to be considered a bedroom.
How to Prepare for Your Appraisal
The appraiser will inspect the exterior and interior of the house and any repairs that it may require. These are the areas you should address before you submit your appraisal.
- Make sure to address any plumbing problems, roof leaks, or stains
- Examine for cracks in walls, ceilings, or foundations
- Inspect the foundation for water intrusion
- Make sure your roof has at least three years of economic life left.To make sure your electric garage door opener is working, check it out.
- Ensure that all utilities work without safety concerns
- Install a handrail at the steps and stairwells
- You can secure decks and second-floor doors
- Install a railing on any raised decks
- Make sure water, electricity, and air conditioning are all functional
This list is not meant to be a comprehensive list of all repairs that may need to be made before an appraisal. This is a list of common problems that might arise during or before the appraisal inspection.
By addressing any repairs or upgrades before the appraisal inspection, you’ll be better equipped for a smooth home buying process and possibly a higher home value.
First Impressions Matter
The curb appeal of a home can have an impact on its value. This should be considered when valuing it. Your home’s overall appearance can affect its final appraised value. An appraiser may be more impressed by a home that appears well-maintained.
The appraiser may subconsciously place a higher value on a home if it makes them feel comfortable or welcome. However, they might assign less value to a house if they find it unwelcome or disapproving of its appearance.
These tips will help you avoid this.
- Replace hardware such as doorknobs and drawer handles.
- Soften the interior decor by adding blankets and plush throw pillows.
- Declutter your home. Decluttering a home can make it feel more extensive and practical, even if it doesn’t alter its physical dimensions.
- Update your exterior, plant new flowers, and mulch.
- Take out any offensive odors such as garbage, food, dirty laundry, or pets.
- Make sure to clean the house so that the appraisers can see all the features.To maintain a neat and safe appearance, mow the lawn, trim the bushes, rake leaves, or shovel the sidewalk.
- To increase comfort and show how heating or cooling works, set your thermostat at a comfortable temperature.
So, What’s The Takeaway?
Buyers, sellers, and lenders all need home appraisals. It doesn’t matter if you are buying a home or selling your property. It would be best if you were as prepared as possible for what the appraisal process will involve.
If you need to sell your house fast, we are cash home buyers located in Dallas, TX. We buy houses all over the DFW Metroplex.