The appraisal process is an important part in securing the house you want to make a home. While the perfect house is priceless to you, it’s important for your lender to make sure that the fair market value of the property is in line with your mortgage value.
Who is a Home Appraiser?
A home appraiser is an unbiased third-party who visits the property you are looking to purchase, refinance, or sell and assesses the value of it. They will appraise the property after agreement to purchase the home but before a lender officially approves the loan.
The appraiser is a licensed or certified professional who is trained and accredited to assess the value of a home. Your lender chooses the appraiser responsible for evaluating the house. Keep in mind, the appraiser does not represent the buyer nor the seller.
What does a Home Appraiser Look For?
You can expect an appraiser to look for the things like:
- Basics – square footage, number of bedrooms and bathrooms, overall property size, and surroundings. Concerns like traffic (land and air), safety threats, school districts, creeks, and more play a role in your valuation
- Comparable properties – age, size, condition, and location all go into to comparing your property to similar homes to help determine the baseline value
- Exterior factors – structure, construction quality, gutters, siding, parking, foundation integrity, and general exterior condition
- Interior factors – layout, code compliance, outlets and wiring, wear and tear on things like appliances and flooring, and general interior condition
Keep in mind, the estimated property value you see online may not match what the official appraisal is. Online values are pulled from public records and often do not consider what your home appraiser will observe in person.
Additionally, your appraiser will not take into consideration movable features. Things like décor, sheds, ceiling fans, hot tubs, and microwaves are considered personal property and don’t play a role in the valuation of a property.
Who Pays for a Home Appraisal?
A general rule of thumb is that the buyer of a home will be responsible for the costs of an appraisal. Typically, that cost is rolled into the closing costs of a home however you can negotiate to have the seller cover the costs.
How Long Does the Appraisal Process Take?
Generally, you can expect the full appraisal process to take about a week from order of appraisal to report submission.
What Happens if the Appraisal is Lower than my Loan Amount
Don’t fret, you still have options!
- Negotiate a new price with the seller – your Real Estate Agent can help you to negotiate with the sellers to work toward a price that better reflects the value of the house
- Appraisal appeal – your Real Estate Agent can help you to research information that makes an argument that the value of the home you are looking to buy is higher than its appraisal amount. Ultimately the appraiser will decide whether your evidence constitutes a change to the original estimate
- Second opinion – you can ask your lender for a second appraisal if you’re apprehensive about the first appraisal. In this case you’ll have to pay out of pocket or potentially try to get your seller to cover the cost. A second appraisal doesn’t guarantee that your lender will approve your loan, you’ll need solid evidence that the second appraisal is more accurate.
- Pay the Difference – while finding the cash or spending more money out of pocket isn’t an ideal solution for most, you can always cover the difference between the amount of your mortgage loan and the selling price of the house.
Should you decide that none of the options available work for you, a purchase agreement’s home appraisal contingency allows you to walk away from the deal and retain your deposit.
What Happens After the Appraisal
Once your appraisal has been completed it’s up to your lender to make the final decision on approving your home loan. Once your loan has been approved it’s time for closing and happy homeownership!