In an ideal world, getting a home appraisal would be a simple process. But, when purchasing, selling, or refinancing a property, it is essential to determine its real value. A home appraisal is the instrument that delivers this information. It’s a pivotal moment in nearly all property dealings. As a property owner, grasping the mechanism is of vital importance. We will explain to you the complete process of obtaining a property appraisal in this manual and also discuss getting ready to the expenses involved.
What Exactly Is a Home Appraisal?
An appraisal of a house is a fair professional valuation. It gives you the value of the property in the current market. This is a job for a licensed or certified appraiser. Their role is to keep the sale safe for all parties. The bank, the buyer, and the seller all are depending on that figure. It is, in fact, the most important paper among real estate documents.
Why Is Knowing Your Home’s Value So Important?
There are several times in a homeowner’s life when they will need this official valuation. It is not just for buying and selling.
Buying a Home
If you need a mortgage, then the lending institution will definitely ask for an appraisal. This is done so that the bank can decide how much they will be willing to lend you. Usually, the amount of the loan is determined on the basis of the lower of the two figures – either the sale price that has been agreed upon or the value shown in the appraisal report. In case the appraisal real estate value is lower than what you expected, then you will have an “appraisal gap”. This scenario is very frequently happening in overheated markets.
Selling a Home
A seller could be interested in getting a pre-listing appraisal just in case the buyer lender is ordering the official one. This is definitely a great tool to help you establish an accurate price right off the bat. It is certainly a source of confidence for your listing price. Additionally, you may employ it as evidence of your price when communicating with buyers.
Refinancing
When you refinance your mortgage, the bank needs to confirm your home’s current value. This protects their investment. It decides your new loan-to-value ratio. This ratio affects your interest rate and loan terms.
Other Reasons
You might need one for tax appeals, estate planning, or when getting a Home Equity Line of Credit (HELOC). In every case, an objective valuation is the goal.
Step 1: Understanding Who Orders and Who Pays
This is where many people get confused. The person who wants the appraisal is not always the one who orders it.
The Role of the Lender
Most of the time, the lender is the one who orders the appraisal in a mortgage transaction. The appraiser works for the lender and not for you. This is done in order to keep the whole process impartial. Lenders are obligated to comply with federal regulations. The appraiser they use has to be independent. To carry out this task, a lender-ordered appraiser usually goes through an Appraisal Management Company (AMC).
Who Pays for Home Appraisal?
The buyer is usually the one who pays for the service. It is a closing cost. This cost is paid directly to the lender or the AMC. Even though the buyer pays, the lender controls the hiring process. This structure prevents anyone from pressuring the appraiser.
When Buying a Home Who Pays for the Appraisal?
If you are buying a property through a mortgage, the purchaser is the one that pays for the appraisal. The bank may choose the appraiser; however, the buyer is the one who deposits the money for the appraisal. It is one of the money parts which are paid at the closing time. Through this, the buyer is guaranteed to get the bank loan he needs.
Situations where the seller pays for the appraisal might be possible. It is usually done if they want to make the transaction process fast. Anyway, the agreement is that the buyer is the one who pays for this.
Cash Buyers and Sellers
If you are buying a home with all cash, an appraisal is optional. You might still want one to ensure you are paying a fair price. In this case, you can hire the appraiser directly. A seller who wants to pre-appraise their home pays for it themselves.
Step 2: How to Get a Home Appraisal
So, how do I get a home appraisal started? The process is different depending on your role.
If You Are a Buyer Getting a Mortgage
You don’t start the process directly. Your loan officer will handle the order.
- Loan Application: You complete your mortgage application and pay the required fees. These fees include the appraisal cost.
- Lender Orders: Your lender contacts an AMC. The AMC selects a qualified local appraiser.
- Scheduling: The appraiser contacts your agent or the seller’s agent to set an appointment time.
- Inspection: The appraiser visits the property.
You simply need to ensure your lender has all your paperwork ready. That way, the process is not delayed.
If You Are a Cash Buyer or Seller
If you are paying cash or selling and want a valuation, you must directly hire the professional. This is also the answer to how do you get a home appraisal if no lender is involved.
- Search for Local Appraisers: Look for licensed, certified residential appraisers in your area. Use state licensing board websites. Ask your attorney or real estate agent for recommendations.
- Verify Credentials: Confirm they are licensed and in good standing. Check their experience with properties like yours.
- Get Quotes: Ask for the cost of home appraisal from two or three different people.
- Order and Schedule: Once hired, you sign the contract and pay the fee. You then work with the appraiser to schedule the inspection.
Step 3: Preparing Your House for the Appraiser
As a homeowner, you have a crucial job before the appraiser arrives. Many people think they need to deep clean the house. While tidiness is nice, the appraiser is not a home inspector. They focus on value, not dirt.
Focus on Function and Value
The appraiser cares about permanent features. They check the roof, the heating system, and the overall structure. They are looking for major needed repairs. A fresh coat of paint might help a little, but major improvements are what really counts.
The “Brag Sheet” or Home Improvement List
This is the most effective thing you can do. Put together a binder or a simple printed sheet. This document should list all the major improvements you have made. Be sure to include the dates and costs.
What to include on your Brag Sheet:
- New roof installation date.
- Kitchen or bathroom renovations.
- New windows or doors.
- Heating or air conditioning replacements.
- Finished basement square footage.
- Major landscaping projects.
Giving the appraiser this information ensures they do not miss any valuable updates. This extra bit of effort can sometimes make a difference in the final value. It is the best way to help your house appraisals go smoothly.
Step 4: What Happens During the Appraisal Day?
The appraiser’s visit usually takes about 30 to 90 minutes. It depends on the size and complexity of the house.
Interior Inspection
The appraiser physically inspects each room in the house. They snap photos and take notes in great detail. They focus on the quality of the finish and the general condition. They will measure the house to verify the square footage. They also examine features such as the number of bedrooms and bathrooms. Furthermore, they inspect any kind of peculiarities, for instance, a big deck or a specially designed home office area.
The Exterior Inspection
They inspect the yard, the lot size, and the condition of the siding and roof. They look for any obvious structural issues. The neighborhood itself is also a factor. They note things like proximity to parks or busy roads.
Comparable Sales Research
The part of their work that is the most significant is actually what they do after they exit. They need to locate comparable sales. These are the houses which are almost the same as yours and have been sold lately. The term “lately” most of the time refers to the last six months. The word “similar” is used for houses of the same approximate size, age, and area. They change the price of your house according to the differences between the comparable and your property.
By way of illustration, a case of a similar house sold for $500,000 having one less bathroom. Hence, the appraiser would add $10,000 to your home value for that extra bathroom. This is at the heart of the valuation.
It is an unquestionable fact that a fair price is of utmost importance. In case you wish to sell your property quickly, and do not want to go through the appraisal process, Quality Properties of Northwest Florida LLC is the answer to your needs where we can close your home purchase in a fast and stress-free manner.
Step 5: Understanding the Costs and Fees
One of the first questions people ask is about money. Specifically, how much does it cost to get a house appraised?
Average Cost of Home Appraisal
The expenses differ significantly in various parts of the U.S. In most cases, an appraisal for a standard single-family home will cost you between $400 and $800.
It is expensive to have a home appraisal done in big metro areas and for complicated properties. The cost of a multi-family home appraisal or a huge, custom house could be more than $1,000. A quite simple condo in a small town might cost you as little as $350.
What Affects the Cost?
- Location
- Property Type
- Timeframe
- Complexity
Step 6: Reviewing the Appraisal Report
Once the report is finished, it is sent to the lender first. They will then share a copy with the buyer, usually within three business days of receiving it. This report is often 10 to 30 pages long.
Key Sections to Look For
- The final opinion of value is the most important number.
- Subject Property: This section details your home’s size, features, and condition. Make sure all the facts are correct.
- Comparable Sales Data: Look closely at the “comps” the appraiser chose. Are they truly similar? Are they close by? Were they sold recently?
Dealing with a Low Appraisal
If the appraised value is lower than the sales price, you have a problem. This is a common point of stress for buyers and sellers. You have a few options:
- Pay the Gap
- Seller Reduces Price
- Negotiate
- Challenge the Appraisal
Understanding how to get a home appraisal is the first step. Knowing how to react to the outcome is the second.
Final Words
It’s an effortless process of obtaining a home appraisal when you understand the distinct phases. The bank usually takes care of the major part of the work. As a homeowner or buyer, your role is to get ready and look over things. You are already aware of the procedure, the coverage, and the costs of the appraisal.
Collecting your documents and knowing what the appraiser does will help you go through this stage of the real estate journey in a calm manner. Keep in mind, the objective is to have a fair and honest evaluation of the property’s actual value. In the case of sellers who want an effortless way, Quality Properties of Northwest Florida LLC is giving accurate valuations and quick closings, thus the standard appraisal period is no longer a source of uncertainty.
FAQs
How long does it take to get a home appraisal?
It usually takes between one and two weeks. The appraiser needs time to schedule the inspection. Then they need several days to research comparable sales. The final report is typically delivered to the lender within ten business days of the inspection.
Can the seller be at the house during the inspection?
Yes, the seller can be present. It is usually best if they are available to answer any questions. They should also be there to hand out the appraiser for the “Brag Sheet” of all the home improvements they have made. This document helps the appraiser justify a higher value.
Is an appraisal different from a home inspection?
Yes, they are different. A home inspection is for the buyer’s knowledge. It looks for defects and potential repair costs. An appraisal is for the lender’s protection. It determines the market price. The inspector checks the health of the home. The appraiser checks the monetary value of the home.
How often should I get a house appraisal?
If you are not refinancing or selling, you don’t need formal appraisal very often. Many homeowners get an updated valuation every five to ten years. This is especially true if they have done significant renovations. It is useful for insurance purposes and general financial planning.
