The home appraisal process can be confusing to those who don’t work directly in real estate or the mortgage industry. In fact, most people won’t deal with a home appraisal until they are well on the road to buy or sell a house, at which point it’s important to understand the ins and outs of getting a home appraised. To help you out, here are the most common questions and answers about getting a home appraisal and the next steps you need to take before buying or selling your home.

What is a home appraisal?

A home appraisal is the process lenders require for a property under contract to ensure that the home value is equal to or more than the mortgage loan amount the homebuyer was approved for. Since the home is the collateral for the loan, the appraisal of the home assures the lender that the home is worth the purchase price agreed upon by the buyer and seller.

Most popular questions about home appraisals

Who requests the home appraisal?

Once the buyer and seller have each signed the contract, the buyer’s real estate agent contacts the lender, who then books a certified home appraiser to evaluate the property. To ensure that the appraisal is objective, this appraiser must be a third party with no loyalty or ties of any kind to the lender, buyer, or seller. Their assignment is to state the facts about the home’s condition and value. Depending on how active the market is, the appraiser usually appraises the property within 48 hours of the lender’s request.

How long does a home appraisal take?

The timeline for getting your home appraised can vary depending on how active the housing market is in your area, but most appraisers can complete their report in 7 – 10 days. Appraisers are well aware that all parties in the transaction rely on them to do the walkthrough, complete the report, and deliver it to the lender as soon as possible. Two common situations can delay a home appraiser:

– If the appraiser is fully booked, it may take 4-5 days to get your house scheduled for a walkthrough.

– If the appraiser can’t get access to the property, it can delay the home loan process. Due to the homeowner’s schedules, it may take a day or two to coordinate a time to have the house open to a home appraiser.

Otherwise, the appraiser can usually get in, complete the walkthrough in a couple of hours, and submit their completed report within a week.

How much is a home appraisal and who pays for it?

The cost of a home appraisal depends on the size and location of the home. The average cost for a home appraisal is $200 – $500 but can range as high as $1,500 if the property is larger or in a rural area.

While the mortgage lender typically requests the house appraisal, the home appraisal fee is added to the home loan’s closing costs, unless the homebuyer pays upfront. This fee is non-refundable. If the sale of the home falls through for any reason, the buyer loses that money.

Typical situations where the appraisal fee must be paid upfront include when the homebuyer is getting a Federal Housing Administration (FHA) loan or a Veteran’s Administration (VA) loan.

What do home appraisers look for?

The home appraisal process can be complicated and involve many variables that will ultimately determine your home’s value. In a nutshell, the home appraiser looks first at the property’s overall condition and safety. They will then compare its current state to similar properties that have sold recently in the same area, much like the seller’s real estate agent did when first listing your home. Data from comparable home sales in your area will help the appraiser factor in any improvements, upgrades, and amenities for the home you’re buying to determine fair market value.

Different factors can affect the value the appraiser establishes for the home and the lender’s decision to approve the loan. Depending on the condition of your home, there may be improvements you can make prior to an appraisal to increase your home appraisal value.

How do I prepare for a home appraisal?

There are many things you can do to get your home ready for a home appraisal, including decluttering, cleaning, and making small repairs and upgrades. If your home is well-maintained and appears in overall good condition, the better chances you’ll have of a favorable appraisal. See more on how to prepare for a home appraisal.

What hurts a home appraisal?

There are several factors that can hurt your home appraisal, however, some of the most common are: a cluttered and unkept house, an unfinished basement, your home systems haven’t been serviced in years and are in need of replacing, your kitchen is outdated, and your home has poor curb appeal.

Can you contest a low appraisal?

In short, yes, you can contest a low appraisal by providing a written rebuttal to your lender with detailed information you think the appraiser didn’t fully consider in valuing the home.

Can I see what my home is worth even if I’m not selling?

Yes, there are several ways you can find your home’s value without using a home appraiser. One of the best and fastest ways is to look at homes that recently sold in your area that are comparable in size and features.

Why is the home appraisal process so important?

A home appraisal is important for all parties involved in the transaction: the lender, the seller, and the homebuyer.

Why the lender wants it

The mortgage lender wants proof that the amount of the loan they’re approving and lending to the homebuyer does not exceed the fair market value of the home. Or they will end up taking on more risk in the event the homebuyer defaults on their loan payments and go into bankruptcy. In this instance, the lender might not be able to sell the home for the same amount of money it loaned the homebuyer and would lose money.

Why it’s important for the homebuyer

A home appraisal is important to the buyer because it provides proof that the property has been priced fairly, and hopefully appraises for at least the offer price they submitted to the seller. If the home appraisal comes in lower than their offer, the homebuyer will have to renegotiate with the sellers for a reduction in the sale price or possibly pay more out of pocket since the lender won’t cover the full amount. If the home appraisal comes in higher than the homebuyer’s offer, then the homebuyer will have made instant equity in their new home after they’ve finished closing with their title company. Since the home sellers have already accepted the offer, they cannot ask for more money.

Why it’s important for the seller

The home appraisal process is important to the seller because it tells them how much their home is worth, also known as the fair market value of their property, and if they priced their home competitively within their housing market. If the sellers priced their home too low, they may not recover all the equity they have acquired while owning the property, essentially leaving money on the table. If the seller prices the house too high, they’ll likely have to renegotiate with the buyer to either drop their price to the appraised value or see if the buyer is willing to pay the extra cost out of pocket. Learn more about how to determine your home’s value.