Home appraisals: 7 commonly asked questions

1) Is there a difference between an appraisal and a home inspection?

2) What comes first, the appraisal or home inspection?

The lender orders the home appraisal during the mortgage process. As the home buyer, you can arrange a home inspection at any time, either before, after or simultaneously with the home appraisal. Discuss the options with your real estate agent and loan officer to determine the ideal timing for your situation.

3) What are the benefits of a home appraisal?

Certified appraisers provide an objective, unbiased assessment of a property’s fair market value. Buyers can be confident that a home’s sale price is reasonable. Also, sellers get credit for improvements and upgrades, as well as the land’s value. For both parties, it provides an objective home appraisal assessment that’s fair and impartial.

4) How is a house appraisal done?

The Home Buying Institute’s guide states that while there’s no standard home appraisal process, they are primarily based on comparable homes in the area. Otherwise known as “comps,” comparable homes are similar in size, style and features to the house that is being appraised.

A licensed or certified appraiser will also do a walk-through of the property, sketching and taking photos, looking for safety code violations and anything that can alter a home’s value. The home appraisal report includes details on a home’s general condition and a review of the surrounding area. Since housing markets fluctuate, appraisers rely on local home sales within the last six months. Location, structural upgrades, size, and amenities are other key factors considered. The report is then sent directly to the lender; as a buyer, you can request a copy of it for your records.

5) How long does an appraisal take?

While the assessment itself may only take a few hours, there are many other factors involved, making it difficult to establish a typical turnaround time. A shortage of qualified appraisers and a busy market can mean a longer wait. Note that lenders are required to provide the house appraisal at least three days before your closing.

6) How much does a home appraisal cost?

Depending on your property type and location, the cost of a home appraisal will vary. When the lender orders it, the buyer is ultimately responsible for the cost. This expense is typically part of the closing costs that a buyer pays in connection with purchasing a home.

7) What are my options if the home appraisal comes in low?

Unfortunately, there are times when your dream home doesn’t appraise at the sales price. This can happen for a variety of reasons such as overpricing by the seller or a shortage of comparable sales in the area. The finance experts at Balance recommend not panicking if the house appraisal comes in low. As a buyer, you have options, such as making up the difference in cash or negotiating a lower price.