Everything You Want to Know About Home Appraisals
The basics of home appraisals covered
When you purchase a home and there is going to be a mortgage taken out on it, your lender will require that there be an appraisal of the home to confirm its value. This is to ensure that the lender is covered for their vested interest and that you aren’t overpaying for something that is not worth it. Here are some key points about appraisals to know about.
What is the appraisal?
The home appraisal is conducted by a licensed appraiser to establish the current value of the property. The appraisal is done by an in-person visit and inspection of the home combined by an analysis of the data of recent sales of similar homes in the area.
Inspection v. appraisal
While both of these are crucial for the homebuying process, they serve different purposes. An inspection is a thorough review of the home, its structure and systems. This is important for the purchaser, insurer, and mortgage company to all be aware of with regards to the physical condition of the home and what may be necessary for repairs. The appraisal, while it takes much of this into consideration, is primarily done to assess the fair market value of the home.
How much do they cost?
Generally speaking most appraisals cost around the $300 to $500 range. Although the mortgage lender orders the appraisal to be done, it is customary for the buyer to pay for it as part of the closing costs.
What is the process?
Once your offer is accepted on your new property and you have signed the contract, that is when your lender will order the appraisal as part of the next steps. Generally you do not attend the appraisal appointment like you would with a home inspection as it is not really necessary, but it is possible if you ask.
What do they look for?
There is a list of things that are looked at when the appraiser conducts a report of value. Here is an idea of the items they will examine:
-Recent, similar sales of properties nearby
-Neighborhood attributes
-Lot and home size
-Age of the home
-Condition of the home
-Appliances and condition
-Home improvements
-Amenities, such as garage, pool, etc
-Local housing trends
As you are the one purchasing theproperty you are entitled to a copy of the report at least three days before the loan closes. Be sure to review it for accuracy. Should the value come back lower than you expected, you may be able to renegotiate the purchase price.