What to Know About The Real Estate Appraisal Process
Finally, someone has come along and given you the offer you’ve been waiting months for. But the stress isn’t over yet. Your home is now about to go through the potential buyers’ house appraisal process.
There are many factors that will determine the appraisal value. It is helpful to these things whether you are a buyer or a seller.
House appraisal issues can cause massive delays when trying to sell a home. They are the 2nd most common issue related to contract delays, only behind problems related to the buyer getting their mortgage commitment from a lender.
Even worse is that appraisal problems are the cause of around 1 in 10 contract terminations. So there is a good reason as to why you might be nervous about this whole thing in the first place.
Let’s talk about everything to do with appraisals so you can better prepare yourself for the inevitable future of having a real estate appraisal. By the time you’re done reading, you’ll know exactly what to expect.
At What Stage Can You Expect The Home Appraisal to Occur?
Appraisals happen just after the seller, and the buyer agree on details like prices and repair costs. The buyer’s borrower will issue an appraiser to gauge the home’s value to ensure the lender is loaning money on a property worth the money being spent.
Some sellers also like to get a pre-appraisal done on their home if they have no idea what it should be priced at. Sometimes there are homes with limited comparable sales or “comps,” making it difficult for real estate agents to put a correct asking price. Having an appraiser in will give you at least another opinion of value.
Who is charged for the home appraisal?
If a loan is involved, the buyer nor the seller can request a home appraisal from a company. Instead, this is sorted out by the lender, who will go to a third-party AMC.
In this case, it’s the buyers who are billed for the home appraisal assessment, and the lender determines the fee. However, the appraisal company is charging the lender and setting the fee, which is in turn passed along to the buyer in the form of part of their closing costs.
Generally, this can be anywhere from $400 to $1000, depending on the lender the buyer has chosen and depending on who the lender chooses to appraise the home. You can learn more about the cost of a home appraisal at Benzinga.
What is The Actual Purpose of an Appraisal?
The point of an appraisal is to determine the market value of a home, protecting the buyer from overpaying for a home that could put themselves in financial jeopardy. As mentioned, to also help the lender find out how much they should be lending.
The way the appraiser does this is by assessing the property to gauge the value, noting things like its features, the size of the home, and its overall condition. A real estate contract will often include a clause that says the sale is contingent on the house appraising for the agreed-upon price or higher. This is a common real estate contingency and not out of the ordinary.
However, in the hot seller’s real estate markets, many contingencies are often waived by home buyers to sweeten their offer. More often than not, this will happen when there are multiple offers on a property.
How to Prepare For a Home Appraisal
The appraiser is there to do the best job they can, but are there ways you can be better prepared for the whole process to ensure your home gets the value it’s deserved?
Well, yes, there are things you can do to ensure that the home gets the right appraisal price:
Clean Your Home
The same way you cleaned your home when you had buyers viewing the property, do this exact thing again as if you’re showing a new buyer around the home. The principal is essentially the same because you want to make a good impression on the person walking around, though this time, it’s an appraiser.
Make Sure Your Pets Are Secured
Don’t get us wrong, who wouldn’t want to be greeted by a loveable dog as soon as they walk into the home? It almost gives a nice impression that the place is a loving home. But there is nothing worse for an appraiser who is trying to do their job when they’ve got a pet following them around wanting some love.
So make sure to secure your dogs and cats away!
Clean Up The Front and Back Yard
Just like you’ve done with the interior of your home, you’re going to want to give some love to the exterior, which means pulling out any weeds, mowing the lawn, and trimming the hedges. Generally, just making this as presentable as you possibly can to ensure that you’re giving off the right impression when the appraiser comes round to do their job.
If your home looks like it has no pride of ownership, it could influence the appraiser. Keep in mind that an appraisal is just one person’s opinion.
You could have ten different appraisers visit your home, and the likelihood is having ten different values. It is no different than a real estate agent giving you an opinion of value.
Leaving the home in bad condition will be a mistake.
What Do Appraisers Lookout For in a Home
Almost all appraisers will use the same form when looking around a home, the URA Report.
This form asks questions about the housing trends, neighborhood demographics in the surrounding area, available utilities, and the property’s exact measurements.
Throughout the exterior, home appraisers are taken note of the following things:
- Construction quality
- Property site
- Roof integrity
- Foundation Integrity
- Gutters and siding
- Exterior condition
Throughout the interior of the home, appraisers search for:
- Functional layout
- Square footage
- Number and size of bathrooms, and kitchens, bedrooms
- Health and safety accouterments
- Included utilities
- Code compliance
- Interior condition
- Structural integrity
Upon checking these things, they intend to see how the property matches other similar properties in the neighborhood. The appraiser will take measurements and photos, which will allow them to get the full picture and finally assign a value to the home.
This is why it is so important to do a spring clean of the home, as if the appraisers deem things to be untidy and unkempt, they’ll have a reason to think that the house itself has not had proper care shown to it, which could influence their opinion of the home and ultimately the value.
It should be noted that appraisers are not doing a home inspection as a professional home inspector does but they do look over the property for substantial issues.
When Will You Get The Results of a Home Appraisal?
The appraisal report could take around a week to get back to you, but it’s more realistic that you’ll be waiting a little longer than that, around about 10 to 14 days.
This is because the appraiser may have to call around, check for permits and verify certain information for their report. If you want things to be as speedy as possible, make sure your agent is communicating well with the appraiser so that they can answer any of the questions they might have about the property.
Final Thoughts on Home Appraisals
You should now have a better understanding of the house appraisal process. Without a doubt, the appraisal is a vital hurdle to clear in a real estate transaction. Doing what you can to help the process along is always a good thing.