Home Appraisal Guide
If you are using a loan to purchase your new home, your mortgage lender will need to know to know if the home you are wanting to purchase is valued at the purchase price and higher.
Note: The home appraisal is different than a home inspection, which focuses on the structural soundness of the property.
What Is a Home Appraisal?
A home appraisal is a process to estimate a property’s value based on factors such as size, amenities, condition, and recent sales of similar properties within the area.
During the home appraisal process, the appraiser will perform a thorough walk-through of the property to determine if there are items that will impact the value of the home.
The purpose of a home appraisal is for your lender to know the market value of the property in question to ensure they are not overpaying for a property. This is a concern as they want to protect borrowers from being in an “upside-down” mortgage from the start.
Who Performs a Home Appraisal?
Home appraisals are performed by third-party certified or licensed contractors who are knowledgeable in real estate and are required to know how to evaluate a property on factors such as neighborhood growth, neighborhood comparison, neighborhood housing trends, and current market conditions.
Note: if you are purchasing your home with a VA loan, a VA-certified home appraiser must be used.
Who Pays for Home Appraisals and When is the Fee Due?
The home appraisal will be ordered by the lender and the cost is passed to the buyer to pay either at the time of the home appraisal or at closing. Ask your lender when the fee will be due to the home appraiser.
How Much Does a Home Appraisal Cost?
The cost of a home appraisal will depend on several factors such as the location of the home, type of home, (single family, condo, etc.), the size of the home, and more. Typically, a home appraisal will cost $200 – $500 but it cost could possibly be higher.
How Long Do Home Appraisals Take?
For most loans, a typical home appraisal will take a few hours or less to evaluate the property. The timeframe will vary from home appraiser to lender’s internal processes but once the appraiser has evaluated the property it should take approximately seven business day for your lender to receive the detailed report.
As the buyer of the home, you will receive a copy of the home appraisal for your review and home purchase file.