Home Appraisal: Definition, Costs & How to Get One

In order to buy a home for a fair price, you need to know how much it’s worth. The same can be said for refinancing your home. This is where the home appraisal process comes into the picture.

Understanding what a home appraisal is and why it’s necessary may seem overwhelming, but it is necessary in order to move forward with any financial investments in a property. With that in mind, let’s take a deep dive into what a home appraisal is and how it works.


What Is a Home Appraisal?

A home appraisal is performed by a real estate appraiser with the goal of determining the fair market value of a home. Keep in mind that a home appraisal is not the same as a home inspection, which is done to determine if there are any issues with the home.


A home appraisal is often done when buying a home. In fact, it is common for real estate agents to recommend that you include an appraisal contingency in the sales contract for the home. That way, if the appraisal comes in lower than the price of the house, you can walk away from the sale if the seller isn’t willing to come down.


A home appraisal will likely be required by your lender before you close the sale of the house. It is also required when you want to refinance your existing home, which is something you may want to do if you want to do something such as renovations or fund college tuition.


How Much Does a Home Appraisal Cost?

A home appraisal for a single-family home typically costs between $300 and $400, with multi-family homes costing as much as $600. The buyer is responsible for paying for the home appraisal and the payment must be made at the time the service is rendered.


Another thing to keep in mind is that the larger the property, the higher the cost of the appraisal might be. The appraiser will survey the property boundaries, and if the property is large, this will take more time. Rural properties are often more expensive, partly because the property can be larger and partly because there are fewer appraisers for these properties.


The Home Appraisal Process

A home appraisal typically involves an inspection that can take mere minutes or many hours. However, the entire process, from the inspection to the delivery of the final appraisal can take several weeks.

When they are conducting a home appraisal, an appraiser looks for three primary things. These include:


  • The condition of the home – This doesn’t go into the amount of detail as a home inspection. Instead, it is a basic assessment of the home’s condition, such as how many bedrooms the home has and whether each bedroom has a closet and a window. They may check for other things, such as whether the cooling and HVAC systems work properly and whether the paint is lead-free.
  • Whether there have been upgrades – The appraiser will check to see if there have been any permanent upgrades made to the interior or exterior of the home. Only permanent upgrades will increase a home’s value. These can include things such as an attic expansion or a swimming pool.
  • The value of comparable homes in your area – The appraiser will also look at home value and sale price of other, comparable homes in your area. They can find this information in public records.


Other things the appraiser will look at include the type of neighborhood the home is in, the age and layout of the home, the types of materials used in the construction of the home, the appliances in the home, and any other amenities the home has, such as decks and fireplaces.


When the appraiser is finished the home appraisal, they will create an appraisal report. You have the right to get a copy of this report at no extra charge, and you should have it at least three days before the closure of the loan.

Always read through the report to ensure it is accurate and notify your lender if you find any errors or if you think the
value of your home is incorrect. You can get a second home appraisal if needed, but you will have to pay for that one too.


A Final Word on Home Appraisals

There is no need to stress over your home appraisal. However, if the appraisal value is lower than the agreed upon purchase price, you will have to consider whether you will buy the home anyway, renegotiate the price with the seller, or walk away, if that was an option written into your sales contract. If you are in a buyer’s market, you have leverage, but if you are in a seller’s market, then buyer has the leverage. This means you may have to pay more than the appraisal value to buy the home.


Speak with one of our experienced team members today to learn more about home appraisals and the home buying process.


Looking for more Foundation tips and learning? Return Home here.

Published 02.10.22

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