What Happens During An Appraisal For A Home?

A home appraisal is a critical step in most real estate transactions, especially when a mortgage is involved. It ensures that the property’s value aligns with the agreed-upon purchase price, protecting both the lender and the buyer from overpaying or lending more than the home is worth.

Key Steps in the Home Appraisal Process

• Appraisal Ordered by Lender: Once a buyer and seller agree on a price and sign a contract, the lender orders an appraisal. The appraiser is a licensed, independent professional, not affiliated with the lender or the buyer.
• Scheduling the Visit: The appraiser coordinates with the homeowner (or seller) to schedule a visit to the property. This can usually be arranged within a few days.
• On-Site Inspection: The appraiser visits the home and conducts a thorough evaluation, which typically takes 30 minutes to a few hours depending on the property’s size and complexity.
• During this visit, the appraiser:
  • Reviews both the interior and exterior of the home
  • Takes photographs and measurements of all rooms, the garage, and the exterior.
  • Notes the number of bedrooms and bathrooms, the quality of finishes, and any upgrades or renovations
  • Checks the overall condition, including structural integrity, roofing, foundation, HVAC, plumbing, and electrical systems
  • Looks for any safety issues or visible damage (e.g., cracks, leaks, pest problems)
  • Assesses curb appeal and landscaping
• Review of Comparable Sales: After the visit, the appraiser researches recent sales of similar homes (called “comparables” or “comps”) in the area, typically focusing on sales within the past six months.
• Market Analysis: The appraiser considers local market trends, neighborhood characteristics, and the unique features of the property to determine its fair market value.
• Appraisal Report: The appraiser compiles all findings into a detailed report, which includes:
  • The appraised value of the home
  • Descriptions of the property and neighborhood
  • Photographs and maps
  • Data on comparable sales
  • Notes on any factors that influenced the valuation.
• Delivery of Report: The report is delivered to the lender, who must provide a copy to the buyer, usually within a week and no later than three days before closing.

What Happens After the Appraisal?

• If the appraised value meets or exceeds the purchase price, the transaction typically proceeds as planned.
• If the appraisal comes in below the agreed price, the buyer and seller may renegotiate, the buyer may need to increase their down payment, or the deal could fall through if an agreement can’t be reached.

Who Pays for the Appraisal?

• The buyer usually pays for the appraisal as part of the closing costs. The cost varies but is generally between $300 and $750, depending on the loan type and property location.

Summary Table: What Appraisers Look For

A home appraisal is an objective, professional assessment of a property’s value, designed to ensure a fair transaction for all parties involved.