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Most home buyers and sellers have to navigate appraisals. This process may seem a bit tricky — and after all, it’s yet another to-do you have to check-off before you can finally move. That said, it’s essential to know as much as possible so that you don’t face any abrupt surprises – like how much does an appraisal cost.
Will you need to prepare for an appraisal? What happens after an appraisal? Take a look so that you can prepare adequately.
Why Are Appraisals Important?
An appraisal involves an evaluation where a third-party professional determines a home’s worth. It’s almost always necessary when you buy or sell a home. Unless you plan to pay or accept a full-cash offer, you’ll need to work through an appraisal. A reappraisal for your current home requires a similar process.
When an appraisal occurs for a purchase-and-sale transaction, it’ll take a look at every factor that contributes to a home’s value — age, condition, location and more. This analysis helps determine whether a seller listed their home at an appropriate price. A refinance transaction uses an appraisal to potentially readjust monthly mortgage payments.
In short, it’s necessary for an appraisal to happen so that a lender can verify how much to offer a borrower for a mortgage. A lender has to have an independent professional opinion before they move forward with a borrower’s mortgage application. If you suddenly can’t pay your mortgage, it’s not a massive loss for your lender as long as they assessed your loan correctly.
When to Expect From a Home Appraisal
An appraisal for a purchase-and-sale transaction happens after a seller accepts an offer. It’s also possible to conduct an appraisal before a seller lists their home. This method usually only applies when you own a house that’s difficult to compare to others.
In most cases, you should prepare for an appraisal as soon as you start to look at houses. If you know you’ll need a mortgage to pay for a home, it’s crucial to check with your lender to verify their appraisal requirements. This way, you’ll know what to expect when it’s time to conduct an appraisal.
How Much Does an Appraisal Cost?
As a buyer, you’ll likely have to pay for an appraisal. In some cases, you may be able to negotiate this part. Your lender will work with a third-party company to select a random professional instead. This method allows for an unbiased opinion. Though an appraisal aims to protect your lender’s interests, it’s also a way to help you avoid overpayment.
How much does an appraisal cost? That figure depends on several factors. Your lender sets a price for this process — and most offer varied estimates. Your location also makes a difference. If a home proves to be tougher to appraise, you’ll likely have to pay more. You can expect to spend around $400 to $500 on a home appraisal.
Actions to Take Post-Appraisal
There are two different paths that buyers and sellers can take after an appraiser has taken a look. Try not to stress too much about this process. If it doesn’t turn out how you prefer, it’s possible to take specific actions to rectify an appraisal’s outcome.
A best-case appraisal verifies that you, as a seller, have priced your home correctly. In that instance, it’s time to tie up any loose ends with your buyer so that you can close on your home. It may take up to a week for results to come back, so it’s all about patience at that point.
What happens when an appraisal comes back with a lower value than anticipated? There are a few ways to handle this issue as a seller. You may be able to push your lender to reconsider if you have enough evidence that a similar home sold for more. But often, it’s ideal to renegotiate with your buyer.
How to Navigate Home Appraisals
How much does an appraisal cost? Is it necessary? How can it help the selling process? Hopefully, these questions are now answered.
Whether you’re a buyer or seller, it’s essential to know what an appraisal entails. You’ll most likely experience at least once if you ever plan to make a real estate investment. Use this guide to ensure your experience isn’t more complicated than necessary.
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About The Author
Evelyn is the founder and editor-in-chief of Renovated with over 5 years of experience researching and writing about home living. Her passion project is writing about the real estate market and home staging. Her other passion projects include reading and exploring Lancaster for the best coffee shops.
Evelyn's work has been featured on National Association of Realtors, McKissock, Insights for Professionals, Appraisal Buzz, and Commercial Truck Trader.
For more articles from Evelyn, you can follow her on Twitter at @renovatedmag.
