Content of the material
- 1. Before selling your house
- How Much Does A Home Appraisal Cost (And Who Pays)?
- What is a home appraisal?
- The Next Steps After An Appraisal
- How Long Does A Home Appraisal Take?
- 1. Your Lender Orders The Appraisal
- 2. An Appraiser Comes To The House
- 3. The Appraiser Creates A Report
- 4. Your Loan Terms Are Finalized
- Appraisal vs. Refinance Appraisal
- What Is the Cost of a Home Appraisal?
- Home Appraisal Tips For Sellers
- Provide An Offer List
- Attend The Appraisal
- Tidy Up
- Provide Comparable Properties
- How to prepare for a home appraisal
- Tidy up the inside and outside of your house
- Check out home systems
- How much does a home appraisal cost?
- Independent Appraisal
- Home inspection vs. home appraisal
- Related topics & resources
1. Before selling your house
Homeowners considering putting their house on the market can have a pre-listing appraisal conducted to get a better sense of the market value of the home. Doing so can help determine a realistic asking price, increasing the likelihood of a fast sale.
How Much Does A Home Appraisal Cost (And Who Pays)?
Even though most lenders require an appraisal as a condition of a loan closing, the buyer pays for the appraisal unless they negotiate for the seller to pay instead. The amount that a buyer pays for an appraisal depends on a number of factors, including the size of the home, the home’s location and the amount of property research that the appraiser ends up doing before they issue a final value report on the appraised value.
Keep in mind that if the property is on a very large plot of land, the appraisal cost will be more because the appraiser often surveys the boundary lines of the property to make sure that the listed square acreage is correct.
Buyers can also expect to pay a higher appraisal fee in a very rural area simply because there are fewer appraisers working in these areas. This might mean a longer wait for an appraisal as well. If you have any questions about how much your appraisal will cost, consult with your mortgage lender.
What is a home appraisal?
A home appraisal is when a licensed professional comes to your house to assess its value. The appraiser determines home value based on market conditions, home amenities, curb appeal and more.
As a seller, you may want to get a home appraisal before listing your house for sale so you can figure out how much your home is worth and use that information to price it competitively. As a buyer, your lender usually requires a home appraisal while processing your loan application, so they don’t lend you more than the home is worth. Either way, you’ll want to get an appraisal before closing to make sure you’re getting a good deal.
The Next Steps After An Appraisal
After your home appraisal is complete, the appraiser will assign a monetary value to the property based on the findings in the inspection and comparables in your area, and then send their findings to the mortgage lender.
Your loan amount will be based on the number that the appraiser assigns to the property, so if they say the home is worth $190,000, your lender will only loan that exact amount, minus any required down payment. This is unfortunate for the seller if they have the home listed at a higher price, as the lower home appraisal will affect their chances of getting that amount on the sale of their property.
However, if the home is appraised at or above the asking price, the loan will be processed and you will be able to begin closing on your home.
How Long Does A Home Appraisal Take?
In general, the home appraisal process can take up to a week or more to go from the date of inspection to the final report.
Before the lender can order the appraisal on a new property, you must put an offer in on the home, have it accepted and sign a purchase agreement. After that, the valuation process can begin.
1. Your Lender Orders The Appraisal
This process starts with the lender ordering the appraisal. Once the appointment is requested, an appraiser will come to inspect the home.
2. An Appraiser Comes To The House
Depending on the type of loan you get, your appraiser will inspect certain parts of the home for specific reasons. They’ll examine the home to learn more about its features, to ensure things like heat and electrical are working properly and that there are no safety issues.
Certain loans, like FHA loans and VA loans, may have more specific appraisal criteria than others. Many of the issues they find during the examination must be resolved before the buyer moves in. We’ll discuss some of the appraisal criteria for different loans later in this article.
3. The Appraiser Creates A Report
Once the appraiser completes their inspection, they will review comps to calculate the fair market value of the home. The appraiser will create a report that contains a detailed description of the property, including its condition and its basic and unique features, plus the final number for the property’s value.
This report may also include general data on the market and the home’s location, other properties used as comps and information that supports the appraiser’s findings and final valuation. You will receive a copy of the report for your own records.
If the home is appraised at or above the purchase price, the loan will be processed as usual. If the home is appraised lower than the agreed-upon purchase price, more steps will need to be taken since the lender cannot lend more money than the home is worth.
4. Your Loan Terms Are Finalized
After the appraisal is done and the purchase price is officially set (either by continuing or in the process of renegotiating), the lender will finalize your loan terms. You’ll receive a Closing Disclosure that details your down payment and closing costs as well as the terms of your mortgage, and then you’ll close on your loan.
If this sounds like too much hassle, there may be a way to bypass the process altogether, but this doesn’t happen often. In some rare cases, usually when working with Freddie Mac or Fannie Mae, it’s possible to skip the appraisal process and use a waiver. It should be noted that there’s some additional flexibility along with safety precautions being taken due to COVID-19.
Appraisal vs. Refinance Appraisal
Appraisals are also needed if you want to refinance your mortgage. As with a purchase appraisal, a refinance appraisal protects the bank by ensuring that it doesn’t lend the borrower more money than the property is worth. If the property later goes into foreclosure for any reason, the lender wants to be able to resell the property and get its money back.
What Is the Cost of a Home Appraisal?
Appraisal fees vary by state, but appraisers must charge customary and reasonable fees for the area. Expect to pay the lender $300 to $500 for an appraisal of a standard single-family home.
“More complex properties are more expensive because the inspection takes more time,” says Erin Benton, vice president of Decorum Valuation Services, an appraisal management company in Ellicott City, Md.
Home Appraisal Tips For Sellers
When you’re selling your home, it’s important that the home doesn’t appraise for significantly less than what the buyer agreed to pay. Unless you’ve got a cash offer, a low appraisal could be a deal-breaker. Here are some ways to help your home appraise for the right amount.
Provide An Offer List
If you received more than one offer for your home, let your appraiser know. Multiple offers can show the appraiser that your home was priced well. Provide the appraiser with a list showing each offer you received.
Attend The Appraisal
As the seller, you’re allowed to be present when the appraiser does their walkthrough. Accompanying the appraiser gives you the chance to point out any upgrades, improvements or particularly charming design features. This is your chance to make sure the appraiser doesn’t overlook those fantastic new cabinets you just installed.
You can’t change your home’s square footage or location, but you can make your home look bigger, brighter and more valuable with a few affordable home renovation tricks.
Maximize your space by putting away countertop appliances and clutter. Replace dim light bulbs with brighter ones. Hang mirrors to maximize natural light and give the illusion of a bigger room. Pull furniture away from the wall. Do whatever you can to make your home look bigger and brighter.
Provide Comparable Properties
If you or your agent are aware of recent sales that could be considered in the report, provide them to your appraiser. Search public records for homes with a final sale price close to what you asked for your home. You can present this list to the appraiser when they arrive at the home.
How to prepare for a home appraisal
As a buyer, your lender sets your appraisal appointment. After that, the appraiser will go into the home and report back with their findings and estimated home value. As a seller, there are several things you can do to prepare for your home appraisal and avoid anything that may damage its score.
Tidy up the inside and outside of your house
A home appraiser’s job is to be extremely critical. Although the tidiness of your closet won’t directly affect the value of your home, it will affect the appraisers’ experience in the space and how they might value the functionality of the space overall, which does affect its value.
For example, a home with small, cluttered rooms probably won’t perform as well as the same home whose small spaces are optimized. You can tidy up the inside of your home, do a deep clean and even throw a fresh coat of paint on some of the walls. Whether you do this on your own or hire someone to help is up to you.
As we mentioned earlier, curb appeal is the first thing a home appraiser will see. For starters, break out your lawnmower and pull those weeds. If your front or backyard is cluttered, try to find space for it in the garage, if you have one, or take time to give away items.
Check out home systems
Before your home appraiser comes, it may pay to have a professional assess your plumbing, heating/cooling and electrical systems, so you know where they’re all at in terms of functionality. That way, there are no surprises during your appraisal. You may choose to update or fix one of your systems if you’re confident it will pay off financially.
Getting a home appraisal is a necessary step as a homeowner for both the buyer and seller. As the buyer, a home appraisal will help determine how much the lender gives you and will help navigate a fair deal. Home appraisals help determine the value of a house, which can help determine a listing price and help prepare a house for sale. Keep these five factors in mind when preparing for your home appraisal.
How much does a home appraisal cost?
A typical, single-family home appraisal ranges from $300 to $450, though that can vary depending on a number of factors including the size of the home, the value of the property, condition of the property and the level of detail involved in the appraisal. A large home or property will usually be more expensive to have appraised. In larger cities or areas with higher living costs, the range could be $500 to $800 or more.
A professional appraiser’s fees are regulated in part by the Dodd–Frank Wall Street Reform and Consumer Protection Act and must be reasonable and customary for the geographic market.
Appraisers work independently as well as for lenders. Contact a local, licensed or certified appraiser who is familiar with your community to give you a current market evaluation of your home. Independent appraisers have no hidden agenda, are not working for lenders or buyers, and can give you a qualified estimation of value for your home.
Home inspection vs. home appraisal
Unlike an appraiser, the home inspector’s goal is to evaluate the home for signs of damage or issues. An appraiser might assume the dishwasher is working if it’s not leaking, for example, but a home inspector would run it to confirm it functions properly.
Appraisals and inspections have some similarities, though, including that they take into account the condition of the home. Both services can cost about the same, too.
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