New to the appraisal process and not sure what to expect?
This post is your guide to house appraisals for buying, selling or refinancing a house.
When you want to buy a new home, sell the one you have, or refinance, there is one important thing that you cannot do without: the appraisal process.
This post will provide insight on how to make the appraisal process easy and equip you with knowledge to handle it like a pro.
I will help you prepare for the appraiser’s visit, and explain how to understand the final report. Let’s go!
This post is all about what to expect during the house appraisal process.
What is a Home Appraisal?
A home appraisal is when a licensed or certified real estate appraiser determines how much your house is worth according to the market.
Appraisers consider things such as location, condition, size, and the purchase prices of similar homes nearby.
Banks usually request an appraisal so that they don’t lend more money than what they could sell the house for if the borrower defaults.
This appraisal process is crucial because it protects the lenders and informs the borrowers.
The Appraisal Process Step 1: Preparing for the Appraisal
Before the appraiser arrives, here are some things you can do to make sure your home looks its best.
Clean and Declutter
First impressions matter a lot.
Make sure to polish your floors, wash your windows, and tidy every nook and cranny.
Even though the appraiser is not there to judge your housekeeping, a clean house looks good and shows that someone regularly maintains it.
This is important because the bank wants to know if the property has been well maintained.
Make Repairs
Taking care of minor repairs before an appraisal could be helpful as this may help you get a better value for your home.
Here’s why: Part of the appraisal process requires the appraiser to analyze the overall condition of the property.
Take a look good look at the exterior of your house too.
Make sure to trim the bushes, cut the grass, and apply paint where it is chipping or peeling.
Doing this shows that you take care of your property and will impact the overall condition.
Collecting Documents
Having the right paperwork will make the appraisal process much smoother.
List all repairs or upgrades that have been recently completed, like a new roof or kitchen remodeling, etc.
Gather any receipts, permits, and other papers related to these renovations.
While the appraiser does not need this documentation, the lender may ask for it.
This also shows that you are organized and prepared to support your statements.
The Appraisal Process Step 2: The Appraiser’s Visit
You might feel a little nervous on the day of inspection, but you have to remember that this is when you get to showcase your home’s best features.
Exterior Assessment
Beginning from the outside, the appraiser will examine your house, take photos and measurements.
They will look at things such as the roof, siding, foundation, and external features like pools or decks.
Besides the size of the yard, the appraiser will also evaluate any extra features, such as a garage or outbuildings.
Interior Assessment
It’s best to be sure there is full access to all rooms inside the house since the appraisal process includes a detailed inspection.
The condition of the walls, floors, ceilings, and fixtures are checked to see if your home is well-maintained and if there are damages that need repair.
The appraiser will also take pictures of every room, count the number of bedrooms and bathrooms, and draw a layout of your home.
Comparable Sales Analysis
The appraisal process includes a comparison of your house with ones recently sold within your area to figure out how your house compares in terms of size, layout, and condition.
This helps the appraiser understand the current market conditions and where your property stands compared to others.
Your home’s value is not just about what’s inside but also about the neighborhood.
The Appraisal Process Step 3: Appraisal Report
After the visit, the appraiser will create a report with their findings and your home’s market value.
Reviewing the Report
Take time to go through the appraisal report once you receive it.
The report shows how the appraiser determined the value, with information on similar homes, the condition of your home, and local market details.
Check for errors like wrong measurements or missed upgrades.
If you notice something is missing or incorrect, contact the appraiser for clarification.
Addressing Concerns
If the appraisal value isn’t up to your expectations, don’t worry. You still have options available for you.
Start by reaching out to the lender to discuss any concerns or questions about the appraisal report.
If you try to speak with the appraiser directly about the appraised value, there is a fine line that cannot be crossed.
It’s not permissible to attempt to influence or pressure the appraiser to change the estimate of value.
However, many appraisers are happy to explain the general appraisal process and you might gain a better understanding of how they determined the value of your home.
If you still think that the appraisal is not accurate, you can ask the lender how to submit a reconsideration of value.
You will need to submit additional information and/or comparable properties that support your case.
The Appraisal Process Step 4: Using the Appraisal
When the appraisal is completed for mortgage financing the lender is the appraiser’s client.
The appraiser is only permitted to send the appraisal report to the lender.
By law, the lender is required to provide the borrower a copy of the appraisal report upon request.
The appraisal process is different for every lender.
Some lenders will provide the appraisal report to the borrower immediately, some will provide the report at settlement, and some will only provide the report upon request.
Here are a few ways you can use the appraisal report:
Buying
Knowing the market value of the house you are about to purchase helps you make informed decisions and get the best deal possible.
It ensures you’re not paying too much for a property, unless you choose to by offering to pay the difference between the sale price and the appraised value.
Selling
If you’re the seller, and the buyer has shared the appraisal with you, then it will help you to better understand the market value of your home and the attributes that impact the value.
Or you could be proactive and explore our article on Negotiation – The 1 thing that will change Everything
Refinancing
Appraisals are important if you’re looking to refinance your mortgage. The appraisal helps lenders determine the amount you can borrow.
A higher appraisal value might open the door to better loan terms and lower interest rates.
For more information on refinancing, visit NerdWallet’s Guide to Mortgage Refinancing.
Property Tax Assessment
An appraisal can also inspire you to take a good look at your property taxes and serve as evidence to challenge the assessment. This can potentially save you money over time.
Common Appraisal Misconceptions
Understanding the appraisal process also involves clearing up some common myths and misconceptions. Here are a few things to keep in mind:
Misconception #1: The Appraised Value is the Selling Price
It’s easy to confuse an appraised value with the selling price of your home.
However, the appraisal is just an estimate of the market value, not the final selling price.
The actual selling price can be influenced by many factors, including buyer demand and negotiations.
Misconception #2: Home Improvements Always Increase the Appraisal Value
Not all home improvements will boost your home’s market value.
Focus on improvements that add real value, like updated kitchens and bathrooms, energy-efficient features, and extra living space.
For more insights on effective home improvements, explore our article on Solar Energy – How does this Extra Amenity Impact Value?
Misconception #3: Appraisals are Always Accurate
Real estate appraisals are educated estimates based on facts and statistics, but they are not always perfect.
Appraisers use data, expertise, and judgment to determine value.
That’s why it’s important to review your appraisal report and address any concerns.
By preparing your home, understanding what to expect during the appraisal, and knowing how to use the final report, you can make informed decisions about your property’s value.
If you have questions or need personalized advice, don’t hesitate to reach out to us anytime.
