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What to Expect from a Home Appraisal

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What to Expect from a Home Appraisal

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. 

A Home Appraisal is Unbiased

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:

  • Age
  • Location
  • Recent sales of similar homes
  • Renovations or additions
  • Condition

You May Have to Pay for the Appraisal

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. 

Appraisals Can Take a While to Complete

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. 

What Happens Next?

Once the home appraisal is complete, here are three possible outcomes:

  • If the appraisal matches the total value of the home, then your lender will move forward to the closing process.
  • If the appraisal is higher than the loan amount, then you now have immediate equity, and the closing process will still begin. 
  • If the appraisal is lower than the loan amount, then the lender won’t agree to move forward. Don’t despair. You can rely on your realtor to iron out negotiations to convince the seller to accommodate you.

Learn What to Expect from a Home Appraisal Today

Do you want to learn more about how you can receive an appraisal for your home? If so, click here to contact our professional team at Allstate Appraisal today for more information. 

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