Home appraisals are an essential part of the homebuying journey. This step is a critical component in most situations when someone is selling, buying, or refinancing a home.
A home appraisal typically costs between $312- $408, according to Home Advisor. This expense is yet another extra fee that the buyer has to pay, but it is important. On rare occasions, the seller agrees to pay the appraisal. Unfortunately, this doesn’t happen often. Therefore, most homebuyers should be prepared to learn about and cover appraisal costs before purchasing a home.
An appraisal is done by a professional/real estate appraiser in the industry and can provide an unbiased opinion on the value of a home. Typically, a licensed or certified appraiser based their value by looking at similar homes in the area that have been recently sold.
Appraisers typically also analyze the property thoroughly before making an appraised value.
Lenders who borrow to someone purchasing the home whose value is in question want to ensure that the home isn’t worth more than the mortgage amount they are requesting.
If the home should go into foreclosure, it serves as collateral for the loan and would be used to pay off the remaining debt on the mortgage. However, if the homeowner overpays for a property, the bank might lose money if the owners owe more on the house than it is worth.
The appraisal process protects the bank from a bad deal and assists in the recovery process if the house ends up in foreclosure, ensuring that they will likely get at least what is owed on the foreclosure home.
As mentioned earlier, plenty of factors affect how much a home will be appraised for. Here are the top three:
The Property- When evaluating the worth of a home, the property as a whole is the crucial factor in determining its own value. Appraisers typically spend time exploring the property to have an accurate appraisal.
Location- Location, location, location. Most people have a reason for where they want to live; families are looking for good schools, business professionals don’t want to live too far away from the city, etc. Some locations are safer than others; some are closer to important schools or businesses. Again the reasons for a location’s popularity vary. Where the property is located also determines its worth.
The Housing Market- The housing market plays an important role when determining the value of any home. The recent housing market boom has skyrocketed the value of homes, but some real estate experts say that the housing market could soon be heading for a crash. The housing market will help determine the value of properties that have recently sold in any area- and appraisers use recently sold properties in the same area that are similar to the one being appraised to help determine the property’s worth
The home appraisal process is a quick one. A home appraisal doesn't take too long, most appraisals from start to finish can take from a few days to a few weeks.
Inspections of the property take under a day, most last less than a few hours. So, if you are looking for a home, be prepared for the appraisal process to go by rather quickly. Once the appraisal is completed, they will either deny your loan or approve it. If they deny your loan, you can appeal the outcome by contacting your lender.
To help their home sell, homeowners should also consider what they can do to help their home be appraised for the full value. These improvements should be done even before putting the house on the market and maintained until the home is sold.
If you are selling your home, don’t stress out too much. Making some minor adjustments should help you on your home selling journey. This doesn’t have to be an overwhelming process. Here are a few tips to help you out.
Start with curb appeal. The front of your home is like a cover to the book. If it’s not appealing, no one will want to go inside. Simple things like putting a few plants in the front or getting a new mailbox can help maximize your curb appeal.
If necessary, do a few minor upgrades. Every homeowner has a to-do list of things that should be fixed. For example, fixing the plumbing, squeaky doors, the leaky faucet. Performing minor fixes can help bring up the value of the home.
Make small changes. Adding a fresh coat of paint can make a big difference when your home has outdated color schemes. Making small changes to your home could bring your home value up thousands of dollars.
Clean your home or hire a cleaner. If you are selling your home, it needs to be spotless, especially when you take pictures, have showings, and during an appraisal. Showings can happen last minute, so keeping things clean as much as possible will help you sell your home faster.
Appraisals rarely can be avoided for buyers who are financing the purchase of their home. However, there are methods for buyers and sellers to influence the appraisal outcome positively, and an appraisal can be appealed if the results seem inaccurate.
Using the above tips as a buyer or seller can help you during your new home journey.