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Top 5 things to know about getting a home appraisal

Top 5 things to know about getting a home appraisal

Top 5 things to know about getting a home appraisal

For anyone who wants to buy a house or enter the real estate market, there’s a plethora of things to consider and necessary steps to take.

 

So if you’re planning to do one or the other, you’ve probably already heard of the term ‘home appraisal’.

 

You might be thinking that it’s not an urgent matter and that you can just cross that bridge when you get there, but getting a home appraisal isn’t a simple process at all. There’s a reason why it’s a crucial part of buying or selling property: it can make or break the sale. 

 

For instance, if you’re a seller and your home appraisal turns out to be less than the price agreed upon, you’ll end up having to make up for that difference from your own pocket, or you’ll end up with a cancelled transaction. 

 

Likewise, if you’re looking to trade your mortgage in for a new one, a low appraisal will  prevent you from getting good loan terms - or worse, bar you from refinancing at all.

 

So to avoid taking these risks (and more), you need a deeper understanding of what a home appraisal is and what it involves. That also means you need to prepare yourself for what you’re getting into.

What is a home appraisal?

According to Investopedia, a home appraisal is an unbiased professional opinion of a property’s fair market value and will be completed by a sales consultant or licensed sales agent and is based upon comparable property sales within the past 12 months in that area. But a home appraisal is an opinion of reasonable market worth only. 

 

An appraisal is conducted by a qualified appraiser who is legally responsible for the information they provide, therefore they must base their appraisal on facts. Recent comparable sales form the basis of most residential property valuations, though appraiser will also take into account the following attributes:

 

  • Exterior condition

  • Interior condition

  • Lot size

  • Amenities (like fittings and fixtures) 

  • Number of rooms and the types of rooms 

  • Floor plan

  • home improvements by the seller/owner

  • Existing renovations

  • Local council zoning and planning restrictions 

  • Period or architectural style of the property 

  • Ease of access to the property

 

Typically, the borrower pays the home appraisal fee, which on average costs around $300 to $600 in high-density areas and about $1000 in rural areas. These fees vary depending on factors such as property location and appraisal process complexity.

 

[SECTION ON COSTS FOR HORIE+DAVIES TO ADD RE: THEIR APPRAISAL COSTS IF APPLICABLE]

What can you expect from a home appraisal? 

 

A home appraisal is conducted once you’ve worked out the price details, repairs, and credits with your buyer. At that stage during the home sale, the lender will hire a qualified appraiser to determine the home’s value.

 

This appraisal has to be requested through a third-party appraisal management company, rather than ordered from a company of the lender’s choice to ensure that the assessment remains unbiased.

 

The appraisal mainly exists to protect buyers from paying more for a property than its actual worth.

 

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