Most prospective homeowners have a very personal reason for wanting to purchase a new home. It could be because they are looking to receive their dream kitchen, additional bedrooms or bathrooms, or the ideal master bedroom suite.
Unfortunately, your lender is not focused on the details of your dream home that attract you. Instead, their only priority is ensuring that the value of your chosen home aligns with the value of the mortgage you’ve qualified for.
To lenders, a house isn’t a home. Instead, it’s valued as collateral. If, for some reason, you default on your payments, they can sell the home to recoup their losses. For this reason, a home must be valued at or above the purchase price.
Your home must be valued before the closing procedure can begin, and this process is known as a home appraisal. If you’re at this stage of the home-buying process, you should know what to expect from a home appraisal.
Before you purchase a home, it must go through an appraisal by a neutral third-party, the appraiser. An appraiser is a certified individual or company that determines how much a home is worth. Their job is to never take anyone’s side. The lender will select an appraiser through a separate company, known as an appraisal management company, that has an active roster of appraisers.
Appraisers will visit a home and survey five main aspects:
Typically, the home buyer is responsible for paying for the appraisal. This fee is included in your closing costs. However, you can negotiate who will be responsible for covering the appraisal.
The seller may be willing to pay this cost if they’re motivated to do so. Home appraisals can cost anywhere between $290 to $370. Costs can vary largely depending on the square footage of the home. In fact, an appraisal may be more expensive for larger or more quirky homes.
The standard of a typical home purchase agreement requires a home appraisal to be finished within 14 days of the contract being signed. This is known as the “home appraisal contingency.” It can take an appraiser several days to visit your home and complete their report. In an abnormally busy housing market, waiting times can range even longer. Your lender will request an appraisal immediately after your contract has been signed.
Once the home appraisal is complete, here are three possible outcomes:
If you have a question or would like to place an order for an Appraisal or Review, please fill out the form below. Once you’ve submitted your order, someone from our office will contact you within 1 business day to confirm your order or answer any questions.