When you're purchasing a new home, one of the most important components of the buying process is the home appraisal. A home appraisal uses a visual inspection, along with information about comparable sales, to calculate the property's estimated value. Our real estate agents encourage homebuyers to know the following details about the appraisal process. 

• A Home Appraisal is Nearly Always Required for a Home Mortgage
  If you're financing some of your home's purchase price with a mortgage, your lender will likely require an appraisal before they approve and fund the loan. This allows the lender to confirm that the home is worth the money they're lending to you and ensure that your loan conforms to their guidelines. Lenders won't lend you more for a home than it's actually worth. 

• The Appraisal is One of the First Steps in the Closing Process
  Once a seller accepts your offer, there are a few things that need to happen for the transaction to be completed. A home appraisal is one of these required steps. It's usually one of the first things you schedule after your offer is accepted; scheduling an appraisal sooner rather than later gives you time to work out any issues that arise during the appraisal. The visual component of an appraisal usually takes an hour or two, while the entry process (including research and writing the appraisal report) typically lasts a week or two. 

• There are Options for a Lower-Than-Expected Appraisal
  Should an appraisal come back for a lower-than-expected amount, this can pose an issue for buyers using a mortgage to purchase a home. Fortunately, there are a few things that can be done to salvage the deal. The seller can agree to drop the price so that it's in line with the home's appraised value. Or, if a buyer loves a home, they can bring extra cash to the mortgage closing so that the mortgage conforms to the lender's guidelines. For example, if your agreed-upon offer price is $400,000, but the home appraises for $390,000, you can pay $10,000 cash so that the amount the lender is loaning you doesn't change. If there's reason to believe that the appraisal is incorrect or using outdated info about comparable sales, you can request a second appraisal from a different appraiser.

• An Appraiser Looks at Several Different Factors When Valuing a Home
  Your home appraiser will look at a variety of details when deciding the value of a home. They'll look at the size and layout of the home, along with information about the land parcel and the home's amenities. The home's overall condition, as well as the age of its major systems and appliances, will influence the value. The home's location and neighborhood also impact the appraisal. A home that's located in a desirable spot will appraise for more money than a property with a less desirable location. Data from recent sales for comparable homes will influence an appraisal. If several similar homes have recently been sold for low prices due to foreclosure or a short sale, this can affect your home's value.

A home appraisal is a necessary step for homebuyers financing the purchase of a home; understanding the home appraisal can alleviate any anxiety or stress associated with the process. Ready to start looking for your next home? Contact us to get started.