What to Know About the Home Appraisal Process & How it Works

January 3, 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.  

Before the Appraisal is Scheduled

What is a Home 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 home and research the surrounding homes in the neighborhood. 

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.

During the Appraisal

How to Prepare for an Appraisal Once It’s Scheduled

There are a few minor things you can do to prepare for your home appraisal.

  • Tidy up the inside of your home
    Since the appraiser enters your home, it will be best to clean up the inside of your home. Ensure all the walkways are clear of clutter, and the home is in its best condition for the evaluation. 
  • Touch up the outside of your home
    If you have extra paint laying around and have some areas that need to be touched up, you should try to do so before the appraiser comes to your home. They will examine the exterior condition; making sure any chips or cracks are covered is a good idea!
  • Check your appliances and utilities
    Make sure your heating, cooling, and electrical systems are all working correctly before the appraiser comes. It is also a good idea to make sure your kitchen appliances are working correctly. 
  • Keep your pets in a separate room
    If the appraiser is not a dog or cat person, it is best to keep your pets in a different room. Plus, this may help you or the appraiser avoid any potential distractions! 

What Happens During a Home Appraisal? 

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 following features of the interior and exterior of the property may be reviewed: 

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 

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

How Long Does an Appraisal Take?

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

After the Appraisal

When Should I Expect to Receive the Appraisal 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 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.  

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 an 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. 

How Long Does it Take to Close after the Report is Received?

After the appraisal is complete, the mortgage underwriter will review the report and make a final decision (approved, approved with conditions, or denied). From there, all parties will work together to schedule a closing date to finalize the mortgage process! 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 one week to a few weeks. 

Click here to learn more about the steps in the home buying process.