Understanding home appraisal
A home appraisal is an evaluation of the value of a property conducted by a licensed appraiser. Appraisals are typically required for mortgages because they help lenders determine the value of the property and whether it’s sufficient collateral for the loan. In other words, an appraisal helps ensure that the lender isn’t lending more money than the property is worth.
if a home appraisal comes in lower than expected, it’s important to stay calm and carefully consider your options
During an appraisal, the appraiser will typically visit the property and evaluate a variety of factors that can affect its value, such as the location, size, condition, and amenities. The appraiser will also review recent sales of comparable properties in the area to help determine the property’s market value.
Once the appraisal is complete, the appraiser will provide a report that includes the estimated value of the property, a description of the property and its condition, and any factors that may have affected the appraisal.
The cost of an appraisal is typically paid by the borrower, and the appraisal is generally required before the lender will approve the loan. In some cases, the appraisal may be waived if the borrower is refinancing an existing mortgage, but this depends on the lender’s policies and the specific circumstances of the loan.
Overall, a home appraisal is an important step in the mortgage process that helps ensure that the lender is making a sound investment and that the borrower is getting a fair deal. If you have questions about the appraisal process, be sure to talk to your lender or a licensed appraiser.
How to find an appraiser
If you need an appraisal for your home as part of the mortgage process, you’ll want to find a qualified appraiser who is licensed in your state. Here are some steps you can take to find an appraiser:
Check with your lender:
Your lender may have a list of approved appraisers that they work with. Be sure to check with your lender first to see if they have any recommendations.
Ask for referrals:
Talk to friends, family members, or colleagues who have recently bought or sold a home. They may be able to recommend an appraiser who provided good service.
Search online directories:
There are several online directories of licensed appraisers that you can search. The Appraisal Subcommittee maintains a national registry of licensed and certified appraisers that you can search by name or location.
Contact a professional appraisal organization:
There are several professional organizations that appraisers can belong to, such as the Appraisal Institute or the American Society of Appraisers. These organizations may be able to provide a list of qualified appraisers in your area.
Check with your state regulatory agency:
Each state has a regulatory agency that oversees appraisers and other real estate professionals. You can check with your state’s agency to ensure that an appraiser is licensed and in good standing.
When selecting an appraiser, be sure to ask about their experience and credentials, and get an estimate of the cost and timeline for the appraisal. By doing your research and finding a qualified appraiser, you can help ensure that your home appraisal is accurate and meets the requirements of your lender.
What factors appraisers consider when valuing a home
When appraising a home, licensed appraisers consider several factors to determine its market value. Here are some of the key factors that appraisers typically consider:
The location of a property is one of the most important factors in determining its value. Appraisers consider factors such as the neighborhood, proximity to amenities, and school district when assessing a property’s value.
Size and layout:
The size and layout of a property are also important factors in its value. Appraisers consider factors such as the square footage, number of bedrooms and bathrooms, and the overall layout and flow of the property.
The condition of a property is another key factor in its value. Appraisers look for signs of wear and tear, as well as any necessary repairs or upgrades that may be required.
Age and style:
The age and architectural style of a property can also affect its value. For example, newer homes may be valued higher than older homes, while homes with unique or historic architecture may be valued higher than more generic styles.
Appraisers also look at recent sales of comparable properties in the area to help determine the value of the property being appraised. These sales are often referred to as “comps,” and they provide a benchmark for pricing the property.
Upgrades and amenities:
Upgrades and amenities such as a new kitchen, a swimming pool, or a home theatre can add value to a property. Appraisers consider the cost and quality of these upgrades when assessing the property’s value.
Finally, appraisers consider current market trends and conditions when assessing the value of a property. Factors such as supply and demand, interest rates, and economic conditions can all affect the value of a property.
By considering all of these factors, appraisers can arrive at an accurate estimate of a property’s value. This information is important for lenders when making decisions about loans, and for buyers and sellers when negotiating a sale.
How to prepare for a home appraisal
If you’re getting ready for a home appraisal, there are several steps you can take to help ensure that the appraisal goes smoothly and that you get an accurate estimate of your home’s value. Here are some tips for preparing for a home appraisal:
Clean and declutter your home:
Make sure your home is clean and tidy before the appraiser arrives. This includes decluttering your home, clearing out any unnecessary items, and making sure all rooms are accessible.
Make necessary repairs:
If there are any repairs that need to be made, such as fixing leaky faucets or replacing broken light fixtures, make sure to take care of them before the appraisal.
Gather any documentation that may be relevant to the appraisal, such as property surveys, blueprints, and recent renovations or upgrades.
Make a list of upgrades and amenities:
Make a list of any upgrades or amenities that your home has, such as a new roof or a swimming pool. This will help the appraiser accurately assess the value of these features.
Make note of any recent home sales in the area:
If there have been any recent home sales in your area, make a note of them and provide the information to the appraiser. This can help provide context for the appraisal.
Be available for questions:
During the appraisal, the appraiser may have questions about your home or property. Make sure you’re available to answer any questions they may have.
Keep pets and children out of the way: During the appraisal, it’s a good idea to keep pets and children out of the way. This can help the appraiser focus on their work and prevent any distractions.
By following these tips, you can help ensure that your home appraisal is accurate and provides an estimate that reflects the true value of your home.
What to do if a home appraisal comes in lower than expected
If a home appraisal comes in lower than expected, there are several steps you can take:
Review the appraisal report: Review the appraisal report carefully to make sure there are no errors or inaccuracies. If you find any errors, provide documentation to support your dispute.
Check the comparable sales:
Look at the comparable sales that the appraiser used to determine the value of your home. If you have information about other recent sales in the area that the appraiser may not have considered, provide this information to support your dispute.
Get a second opinion:
If you believe that the appraisal is inaccurate, you can request a second opinion from a different appraiser. Be sure to choose an appraiser who is licensed and experienced in your area.
Negotiate with the lender:
If the appraisal comes in lower than expected, you can negotiate with the lender to see if there are any other options. For example, you may be able to provide a larger down payment or negotiate a lower purchase price.
Consider a different type of loan:
If you are unable to get the loan amount you need based on the appraisal, consider other types of loans. For example, a personal loan or a home equity loan may be an option.
Reconsider the purchase: If you are unable to get the loan amount you need and cannot negotiate a lower purchase price, you may need to reconsider the purchase altogether. It’s important to carefully consider all of your options before making a decision.
Overall, if a home appraisal comes in lower than expected, it’s important to stay calm and carefully consider your options. By working with your lender and other professionals, you may be able to find a solution that works for your situation.