Home Appraisal is the most important part of the home-buying process. It is the process of common types of valuation in which the real estate appraiser determines the fair market value of the house. A Home Appraisal provides unbiased insight into a property’s estimated worth by comparing it to recently sold homes in the same area. Getting Home Appraisal can be nerve-wracking, especially if the homebuyers are not sure what is involved. A Home Appraisal is a trained professional’s unbiased assessment of the fair market value of the property.
The Home Appraisal process is just a formality when buying real estate. If a borrower has applied for a mortgage loan then their home still has to undergo a comprehensive Home Appraisal of its worth and an unfavorable Home Appraisal can kill a real estate deal. The Home Appraisal process is somewhat similar to getting comps (as similar to owning property as possible) as the homebuyers did to determine a fair price and the appraiser delves in deeper to determine the home’s exact value. An appraiser will investigate the condition, location, square footage, and any other additions or renovations.
Home appraisal is the process through which the real estate Home Appraiser determines the fair market value of the home. It can assure the homebuyers and their Mortgage Lenders that the price they have agreed to pay for a home is fair. Home Appraisals are often used to determine the Property Taxes, Making Home Appraisals requirements in most countries. If homebuyers need a Mortgage Loan to purchase a Home, their real estate agent will likely suggest that they include an Appraisal contingency in the sales contracts. An Appraisal contingency lets the homebuyers walk away from a Home purchase if the Home Appraisal comes in too low to justify the agreed-upon purchase price.
What Is Home Appraisal?
Home Appraisal is the estimate of a Home’s market Value. It is the key to remember that a Home Appraisal is not the sale or asking price of a Home, It is the estimated value of what the home may be worth. This can differ greatly from the seller’s asking price. The Home Appraisal process is conducted by 3rd party Appraiser who assesses the home’s value based on several factors. In most cases, homeowners will need a Home Appraisal if they are buying, selling, or refinancing a home. Mortgage Lenders require a Home Appraisal to understand the estimated market value and condition of a home, which then affects how much money they are willing to lend. A Home Appraisal is the value analysis of the property by a certified or licensed Appraiser hired by the mortgage lenders during the home purchase or refinance process.
How Does The Home Appraisal Process Work?
A Home Appraisal is the official estimate of the fair market value of the home. It must be conducted by a licensed impartial professional Appraiser who uses the information about the home, the surrounding neighborhood, and recent nearby sales to determine the home’s value. The Home Appraisal is requested by the mortgage lenders and homeowners receive a copy of the Home Appraisal. the cost of Home Appraisal varies by location, property, and complexity of the Home Appraisal, and is paid for by the buyers. If the appraised value matches the agreed purchase price, the transaction is rather straightforward. If the appraised value comes back below the agreed purchase price, then the buyer may want to reevaluate. In case, a home appraisal comes in lower than expected the seller might lower the asking price and insist that the buyer make up the difference. From the seller’s point of view, there could be recent foreclosure or other market events that unfairly affect the value of their home. Ultimately homebuyers can either walk, negotiate a lower price with the seller, or request a reconsideration of value.
What is An Appraiser?
An Appraiser is a trained and licensed real estate professional who is regulated by the State Appraisal boards and must follow the Federal, State, and Local laws and regulations. Each Official Appraiser is required to remain independent and objective meaning they can’t be influenced by Buyer, Seller, realtor, or Mortgage Lender.
What Factors Determine the Home’s Value?
When Estimating the Property’s value, an Appraiser looks for so many things. Here are some common considerations:
- Comparable Properties: Similar to real estate agents, an Appraiser looks at recent sales of homes, especially those that are similar in size and location to the home being purchased.
- Condition: An Appraiser factors in the home’s general condition, age, and quality of material used to build It.
- Location: An Appraiser considers the Home’s location, including views and other remarkable features, as well as school district ratings and proximity to public transportation.
- Lot size: An Appraiser will assess the lot size and compare it to similar lots in the neighborhood. The Appraiser will also assess the square footage and features of the home, including the number of bedrooms and baths.
- Upgrade and Improvements: If the home has had major structural improvements including additions and remodeled rooms, the appraiser factors that in, too.
- Amenities: Some Special features including swimming pools, wood flooring, or an in-law suite can also impact the home value.
What The Homebuyers May Expect When Obtaining Home Appraisal?
Here is the step-by-step overview of what homebuyers can expect when obtaining a Home Appraisal:
- Mortgage Lenders Order the Home Appraisal: If the homebuyers are purchasing a property or house, the mortgage lenders will order the Home Appraisal after their offer has been accepted and they have signed the purchase agreement. If they refinance, the mortgage lender typically orders the Home Appraisal after they Apply for the new Mortgage Loan.
- The Home Appraiser accesses the Home: The Home Appraiser will conduct either an on-site visit or remote evolution to determine the value of the home. An in-person visit to a modest home might take just 15 to 30 minutes and the larger home can take a few hours.
- The Home Appraiser review comps: Along with accessing the property, the Home Appraiser will conduct the market analysis and review the public records to determine what similar properties are worth and how those relate to the home’s value.
- The Home Appraiser delivers a report and Valuation: Once the information has been gathered, the Home Appraiser will put together a report, typically the Uniform Residential, Appraisal Report for the Mortgage Lender.
How Much Does A Home Appraisal Cost?
Generally speaking, a Home Appraisal for single-family homes may cost $300 to $400. The Multifamily units tend to take longer to assess due to their square footage, putting their Home Appraisal cost closer to $600. but it is important to remember that the cost of Home Appraisal varies widely based on several factors such as Size, Land/property size, Type of home, Location, etc. These factors all affect the time, effort, and work, that goes into the Home Appraiser’s assessment. There are other factors that can affect the amount of time it takes to appraise a home.
What Are the Types of Home Appraisal?
Depending on the homebuyer’s circumstances and the Mortgage Lenders, the type of Home Appraisal they are required to get can vary. Here are some most common types of Home Appraisal:
- Drive-by Appraisal: It is also called summary Appraisal. In this Home Appraisal, rather than inspecting an entire property, an appraiser will only examine a home’s exterior to determine its value. It is like the Home Appraiser, which will rely heavily on public records or other data points to estimate a home’s market value.
- Hybrid Appraisal: This allows Home Appraisers to complete their assessment without ever physically visiting a house. A third party typically an appraiser or a real estate agent, completes the in-person inspection.
- Desktop Appraisal: These Appraisals are similar to the hybrid appraisal, except a third party doesn’t visit the home in person. Property records, floor plans, and comparable houses are usually utilized by appraisers conducting desktop appraisals.
- Full Home Appraisal: This Appraisal is what homebuyers typically think of when they think of home appraisals such as the traditional, in-person assessment where an appraiser visits and takes photos and measurements.
What Things The Home Appraisers Look For?
The Home Appraiser’s Job is to assign the total, fair market value to a property versus searching for smaller or potential repair problems. Here are some of the things that a Home Appraiser will look for during the Home Appraisal assessment:
- Health and Safety Hazards
- The Structural Integrity of the Home
- The condition of Home
- Visible Defects
- Notable improvements or upgrades that add value to the home
- Any conditions specified by the lender
Frequently Asked Questions (FAQs)
Question 1: How long does Home Appraisal take?
Answer: The complete Home Appraisal process usually takes a minimum of seven days.
Question 2: How can I prepare for a Home Appraisal?
Answer: You can help your house make the best first impression possible by tidying up inside out, refreshing your landscaping, completing any unfinished repairs, and reducing clutter.
Question 3: Who Pays for the Home Appraisal Process?
Answer: In most cases, the homebuyers pay for the Home Appraisal as part of their closing costs. If a Home sale should fall through the homebuyer is still required to cover the Home Appraisal expenses.
Question 4: How long is Home Appraisal Good for?
Answer: It depends on the Mortgage Lenders, but most typically accept the Home Appraisal for 120 days, according to Fannie Mae. When a Home Appraisal is older, the mortgage lender may accept it pending an update that includes an exterior inspection.
The Bottom Lines
Home appraisals are the essential component of any real estate transaction for homebuyers, sellers, and lenders alike. And for home buyers planning to finance their home purchase with a mortgage, home appraisal is a crucial step in the homeownership journey. The Home Appraisal process is beneficial for everyone involved in the home-buying. For homeowners, a home appraisal ensures they’re paying the current fair market value. For sellers, Home appraisal helps them price their homes competitively.
