Everything to Know About Home Appraisals
Securing an appraisal is one of the most important steps during the home buying process. When purchasing a home, the lender will almost always require a home appraisal before closing. So what does that mean? We’re breaking down home appraisals, from how the process works to how much it costs, so you can be prepared!
So what is a home appraisal?
A home appraisal is the process in which an appraiser determines the value of a property. Appraisers must be certified or licensed to complete this process. The appraiser will form their opinion by using the following: a full analysis of the property’s features, recent sales data from comparable homes in the area, and their judgement of the home’s worth. It’s common to mix up a home appraisal for a home inspection, but they are not the same thing! An inspection evaluates a home’s condition, whereas an appraisal establishes a home’s value.
Why would a lender request an appraisal?
A mortgage lender usually requires an appraisal so they have a better understanding of how much risk is being taken with a loan. The lender will want to avoid lending out more money than a home is worth, in case the borrower defaults on the mortgage.
Who pays for an appraisal?
Homebuyers who are applying for a mortgage are responsible for the appraisal cost, but the lender will decide which professional appraises the home. Similarly, if a homeowner is refinancing their home, then they are responsible for paying for the appraisal. Cash buyers will not be required to get an appraisal, but it’s definitely recommended to make sure you aren’t paying more than the home is worth.
What does an appraisal cost?
It depends on where you’re located! According to Home Advisor, the national average cost for a home appraisal is between $300-$400. The cost is often much higher in large cities or at properties with complex features. Home Advisor reports that Baltimore residents can expect to pay between $450-$750 to have their home appraised.
What determines a home appraisal?
A home appraiser looks at many different features before determining a home’s value. In addition to researching local home price data, an appraiser will look at the home’s age, lot size, style, and neighborhood. They also evaluate the condition of the home, including amenities, appliances, and improvements.
Be sure to request a report of the appraisal
Once completed, a mortgage applicant has the right to obtain the appraisal report at least three days prior to closing for free. You’ll want to request the report and check it for any inaccuracies. Applicants may also request a second appraisal from a different professional, but keep in mind, you will have to pay for it. If the home is appraised for less than expected, you may be able to use that to negotiate a lower price with the seller.
Don’t try to navigate this process alone! If you are just beginning to look into buying or are thinking about upgrading your home, I can help you find the perfect place. Reach out to me through my website or give me a call at (302) 545-8569, and follow my blog for more home-related tips!