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The Home Appraisal: What You Need To Know

22 July 2020

Cody Day

Buying a house involves so much more than finding one you like and showing up at closing. There are many things that need to happen behind the scenes for it all to come together. One of those items is the appraisal.

What is a home appraisal?

A home appraisal is when your bank or mortgage company hires a third party to evaluate the home. They do this in many ways, depending on the bank's policies, FHA or VA requirements, and where your home is located. The appraisal could be completed online, with a simple drive-by, or even with an in-person tour of the inside of the home.

When is the home appraisal done?

The home appraisal is typically done after the inspection contingency has been removed. In other words, once the house passes inspection and all parties sign off on the price and terms of the offer, your bank will start moving forward with their paperwork. 

Why do you need a home appraisal?

Lenders require an appraisal to ensure that what they are lending money on is valued at the purchase price or higher. They do not want to loan more money than a house is worth. 

Who pays for the home appraisal?

The buyer's lender orders the appraisal, therefore, the cost of the appraisal is paid for by the buyer. The cost of the appraisal is usually rolled into the loan itself or paid at closing. 

How long does a home appraisal take?

Once the appraisal is ordered, it is usually done in less than a week. The amount of time it takes the appraiser to physically do the job depends on how they view and analyze the house. In-person appraisals can take less than an hour. 

Do you need to be present for the home appraisal?

Unlike a home inspection, the buyer does not need to be present. The seller can be present if they feel more comfortable, but it is not necessary. The appraiser has licensing to enter the home via the real estate lockbox.

Who schedules the home appraisal?

Once the bank receives the bottom-lined purchase agreement with the inspection contingency removed, they will contact the seller's agent and make arrangements to appraise the home. The seller's agent typically contacts all parties to apprise them of the date.

What if the home appraises for less than the offer?

If the home appraises for less than what was offered on the house, the buyer has several choices. They can come up with the additional cash themselves if the amount of the difference was small. The buyer can also walk away. In some instances, however, the seller will accept the bank's decision and agree to a new purchase price.

The appraisal is a key component of the closing process and is necessary to make sure the buyer is making a solid purchasing decision.

For more information, contact a home appraisal service.

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