Chris O'Shea
A home appraisal is a vital part of buying, selling, or even refinancing a home. The appraisal gives you an objective view of how much your home (or the home you’re hoping to buy) is worth.
Here’s everything you should know.
The Basics
A home appraisal is conducted by a professional appraiser. An appraiser looks at the house, its condition, its location, and its features to determine value. If you are trying to refinance your home, the appraisal is used to ensure your lender has an adequate value of the property.
How it Works
Let’s say you’re looking to buy a home. Once your offer on the home is accepted and you’ve signed a purchase contract, the mortgage lender will order the appraisal. You will pay a fee for the appraisal, usually around a few hundred dollars. The appraiser will then visit the home and consider the following:
- Location
- Size of the house and lot
- Any potential hazards, like the home being in a flood zone
- Sales trends of comparable homes
- Amenities
- Appliances
- Condition of the home, including the roof and foundation
- Sales trends and price ranges for comparable homes in the neighborhood
Once the appraiser has finished, they will issue a report to your mortgage lender, and the lender will send you a copy.
The Number
If the appraisal comes in at or above your contract price, the sale of the home will go through. If it comes in below, you can use the appraisal to try to negotiate a lower price with the seller. A home that doesn’t appraise as projected may also allow you to walk away from the deal, as contract agreements have appraisal contingencies.
Do One Thing: Be prepared to walk away from a deal if the home appraisal is lower than expected.
Jean Chatzky
