What is an Appraisal? The Home Appraisal Process

October 6, 2021 | 5 min read | The mortgage process
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Appraisals are a standard part of the home buying process, usually required on a purchase and refinance transaction. This page will outline everything you need to know about the home appraisal process ranging from preparing before scheduling to what happens after receiving the appraisal report.  

What is an Appraisal?

An appraisal is an unbiased, professional assessment and valuation of the property based on the property’s interior and exterior condition and how it compares to other homes in the neighborhood. An appraisal is often required during the mortgage process to ensure that the proposed loan-to-value is still accurate, and the terms of the mortgage may remain unchanged. 

What’s the Difference Between a Home Inspection and Appraisal?

An appraisal and inspection serve different purposes in the home buying process. An inspection outlines a home’s condition, and the inspector may recommend home repairs or renovations. The inspector will only analyze the interior and exterior of the home. 

An appraisal is an assessment of the home’s market value. The appraiser will not recommend repairs; however, they will check the condition of the interior and exterior of the house and research the surrounding homes in the neighborhood. 

What Happens During a Home Appraisal and What do They Look for?

Once the appraiser arrives at your home during the scheduled time, they will go through a checklist to determine the home’s value and do any necessary research to learn more about the neighborhood and the area’s housing market. The appraiser may review the following features of the interior and exterior of the property:

Appraisal Inspection Checklist

  • The neighborhood
  • The property’s lot size
  • Square footage of the home
  • Condition of the home’s structure
  • Condition of the roof 
  • Number of bedrooms and bathrooms
  • Materials used to build the home
  • Recent renovations
  • Age and design of the home
  • Home amenities (such as a fireplace, deck, or pool)
  • The estimated value of comparable homes in the neighborhood 
  • Recent home sales in the neighborhood 

How Long Does an Appraisal Take?

The length of the process may vary depending on the size of the lot and the home. The entire process may take anywhere from 30 minutes to several hours to complete. 

How to Prepare for a Home Appraisal – Step by Step Process

1.) The appraisal process will begin once your loan is officially in process.

The lender orders the appraiser. GuardHill works with a network of local appraisers and schedules a time for the appraiser to come to your home.

2.) The appraiser comes to the home

The appraiser will arrive at your home on the scheduled date. Here are a few ways to prepare before the appraiser comes:

  • Tidy up the inside of your home and ensure all walkways are clear of clutter.
  • Touch up the outside of your home with extra paint (if needed) to give your home a fresher look! 
  • Check your heating, cooling, and electrical appliances and systems to make sure all of them are working correctly before the appraiser comes. 
  • Keep your pets in a separate room. Although not required, it is best to avoid any potential distractions or disturbances. 

3.) The appraiser creates a report

An appraisal report is a comprehensive overview of the appraiser’s findings, including the home’s estimated market value and the appraiser’s results with attached photos and comments. It may take about 1-2 weeks for you to receive a free copy of the final report. If you have any questions about your report, you may discuss them with your mortgage lender.  

How Much Does an Appraisal Cost and Who Pays?

An appraisal for a single-family home varies based on the location, property type, and other factors such as lot size. It may cost anywhere from $300 to over $1,000. Typically, the cost is paid for by the buyer (borrower) and can be rolled into the closing costs.

What May Negatively Affect my Appraisal?

Some factors that may negatively impact your appraisal are in your control, while others may not. Some examples of factors that may negatively impact your appraisal that you could control include:

  • Unkempt home
  • Structural damage
  • Unusual exterior paint 
  • Renovations or home additions that are not up-to-code 
  • Unnecessary renovations that are not in line with other homes in the neighborhood, such as an expensive kitchen upgrade

Some factors that are out of your control include:

  • State of the housing market (buyer vs. seller’s market) 
  • The home’s location, such as being on a busy street
  • Outdated comparable sales in the area

What Happens if My Appraisal Comes in Low? 

If the appraised value comes in lower than the agreed-upon purchase price, the lender may have to adjust the loan amount to keep the loan-to-value consistent. The borrower may re-negotiate the purchase price with the seller or put more money down to decrease the loan-to-value ratio. The borrower may also request a second appraisal or rebuttal of the original one. As always, it is best to discuss your options with your mortgage lender to determine the best next step.  

What Happens if My Appraisal Comes in High?

If the appraised value comes in higher than the agreed-upon purchase price, then you are good to go and can continue the path to closing on your loan! 

How Long is a Home Appraisal Good for?

Typically, home appraisals do not have an expiration date. However, since the report is based on comparable homes in the neighborhood, the appraisal needs to be reasonably up to date to remain consistent with the current market and neighborhood trends. Therefore, mortgage companies may not accept an appraisal that is more than six months old. 

What Happens After the Home Appraisal Process?

After the appraisal is complete, the mortgage underwriter will review the report and decide (approved, approved with conditions, or denied). From there, all parties will work together to schedule a closing date. It’s important to note that the timeline for the rest of the process may depend on the underwriter’s final decision and when the closing is scheduled, which may take anywhere from a few days to a few weeks. 

If you or anyone you know has questions about the appraisal process, get in touch with one of our mortgage specialists!