When you’re considering buying a house, there are two sides to the story: the seller’s asking price and the actual value of the property. This is where an appraiser steps in.
Is the new home you’re looking at priced too high? A real estate appraisal can let you know whether the amount being asked is a fair purchase price.
Here’s more on the home appraisal process, so you can learn the true value of your future home.
What does an appraiser do?
An appraiser’s job is to determine the current value of a property for the potential buyer. Most of the work to determine the value of a real estate appraisal is done during an on-site inspection, where the appraiser will:
- Conduct a room-by-room walk-through to appraise the condition of the interior
- Walk the length of the real estate property for an appraisal of the condition of the exterior
- Appraise the value of any amenities, such as a swimming pool, finished basement, or built-in bar
- Note any health or safety code violations for the appraisal report
- Record the layout of the property, inspect the square footage, and determine whether or not it’s a single-family dwelling
- If you’re buying commercial real estate, a property appraiser may conduct a business valuation to determine market value in much the same way.
Off site, the appraiser may also evaluate the current real estate market, considering comparable properties in the neighborhood, to help evaluate the home’s value or fair market value of the property.
A home appraiser will report on the value of similar properties in your area, so you can determine whether your upcoming real estate transaction is a smart one.
How do you know if an appraiser is qualified?
Typically, your lender will choose an appraiser. The appraiser should be licensed by the state or have other certification—the Appraisal Foundation, for example, has been authorized by Congress to set qualifications for becoming an appraiser. However, not all states require appraisal certification, so do some research into appraisal value before you start.
Who hires the appraiser?
Usually, the lender or financing organization will hire the appraiser. Because it’s in the best interests of the lender to get a good appraisal, the lender will have a list of reputable appraisers it has hired in the past to discern the value of a home.
Who pays for the appraisal?
The loan agreement normally contains a set value for the appraisal of property. Whoever takes out the loan pays for the appraisal, unless the contract specifies otherwise. Then the buyer pays the appraisal fee in the closing costs. If the sellers are motivated, they may pay for the appraisal to back the asking price, which benefits the buyer by reducing closing and transaction costs.
The lender may not adjust the fee after hiring the appraiser. Expect an average range of $300 to $600, depending on the size of your real estate, property value, and location. Different types of appraisal report take various amounts of effort, which may affect the price.
How long does an appraisal take?
One or two hours is the average time spent for most property appraisals. You should receive the report in an average of three to seven business days. The amount of time it takes to complete an appraisal can depend on the type of report, the size of the property, and other factors.
What are the benefits of an appraisal?
Think of the appraisal as an investment of your time, money, and effort. It is important to know what your house or real estate is worth, and an appraisal will help you get your loan approval. Hopefully, this step and the rest of the house-buying process will go smoothly.