What to know about the home appraisal process
Confirming a home’s value is an important step before you complete the buying, selling or refinancing process
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A home appraisal is an essential part of the home-buying process. It’s important to understand the ins and outs of an appraisal before you make any financial moves.
What is a home appraisal?
A home appraisal is a trained professional’s objective point of view on the fair market value of the home. Knowing how much a home is really worth protects the buyer from paying more than the property is worth. With a home purchase or refinancing, it also assures the lender that it is giving the borrower an appropriate amount.
Who orders and pays for the appraisal?
Your lender orders the appraisal to be performed by a licensed appraiser. However, the borrower is typically required to pay for it. The cost—about $300 to $400, according to HomeAdvisor—appears on the Closing Disclosure as part of the closing costs.
What determines a home’s value?
When estimating a property’s value, an appraiser evaluates many things. Here are some common considerations:
Like a real estate agent, an appraiser looks at recent sales of homes, especially those that are similar in size and location to the home being purchased. Their sale prices are usually the most important factor.
An appraiser factors in a home’s general condition and age.
An appraiser considers the location of the home, including views or other remarkable features, as well as school district ratings and proximity to public transportation.
An appraiser will assess the size and features of the home and property, including the number of bedrooms and baths.
If a home has had major structural improvements such as additions and remodeled rooms, the appraiser factors that in, too.
Special features such as swimming pools, wood flooring or an in-law suite can also impact the home value.
What’s the difference between an appraisal and an inspection?
- They are required and requested by lenders
- Give a general assessment of the home
- Focus on whether the home’s agreed-upon purchase price is in line with what it’s worth
- Compare the home’s features and condition with other recently sold homes
- Generally, they aren’t required by lenders
- Provide a thorough assessment of the home’s condition
- Typically produce an itemized report of potential repairs or problems with the property
- Based on the findings, a buyer may want to renegotiate to determine who will pay for repair costs
5 tips to prep for your home appraisal
If you’re selling your home or refinancing your mortgage, here are some simple appraisal tips that could increase the value of your home.
Gather important documents like land surveys for the appraiser.
Keep a list of home improvements (and receipts) handy.
Improve curb appeal with professional landscaping and a clear yard.
Make minor repairs, such as touching up chipped paint or tightening loose doorknobs.
Make sure all lights, plumbing and safety equipment like smoke alarms work.
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