What to Expect During the Home Appraisal Process as a Homebuyer
You have found the home of your dreams, made an offer, and the seller has accepted! Congratulations! Before you can call the place your own to get financing all sorted out, you are going to need a home appraisal. This way, you will know exactly how much your property is worth and if your lender can feel just as secure in their investment as you have when you found your dream home. An appraisal can make or break your mortgage loan, and while you might be feeling antsy to get into your new place, you will want to ensure that the home will appraise at the sales price because if it does not, a whole new round of negotiations will ensue.
In this article, we will be discussing the process of home appraisal in the world of real estate for you to gain a better understanding but what you can expect as a buyer.
What is an Appraisal?
Apart from working out a price between yourself and the seller, an appraisal report will be drafted by a licensed third-party appraiser to help determine the overall value of the house. Appraisals are usually required by a mortgage lender to determine how much they are going to lend you. It is not uncommon for sellers to have appraisals done before listing the house to help price the property accordingly. The buyer will typically be financially responsible for the appraisal required by the lender, especially if the home is located in a more rural area. The lender will hire the appraiser and will be the first to get the report.
What Happens During the Appraisal?
Three key things go into the appraisal report: a physical inspection, a comparable sales selection, and the final evaluation of data.
1. A Physical Inspection
This process is when the appraiser takes a physical examination of the property you want to buy. They will identify the condition of the property as average, good, fair, or poor, which will affect the value of the home according to what the property is listed as.
2. A Comparable Sales Selection
Appraisers will base their evaluation on comps to appraise the home accurately. The examiner will look at the most recent sales of similar nearby property types, typically sold in the last year, to establish a reasonable cost for the home. What makes a house comparable? Many factors go into the purposes of the analysis, including:
- Was the Sale Recent? Comps that have sold within the last 60 days are ideal because they will reflect current market conditions, though recent sales are not always available, so comps come from earlier sales up to a year.
- How Close is the Subject Property? Real estate pricing is all about the location of the property.
- What is the Lot Size and Square Footage? This will include details like how many bedrooms the house features, number of bathrooms, footprint, and layout.
- What is the Condition of the Home? Appraisers can seek comps with similar levels of repairs and upgrades.
3. Final Evaluation of Data
The appraisal report will take into account nuances such as regression analytics in calculating how much the home is worth. If the appraiser cannot find similar-priced homes, that can be a sign that the property you are interested in is overpriced. The report will show adjustments to the comparable sales to determine the home’s value, usually in ten pages or less.
How Long Will My Home Appraisal Take?
Depending upon the size of the home and the state of the current housing market, an appraisal can take anywhere from a few days to a few weeks. Typically, however, an appraisal should be ready to be looked over in a week to two weeks after it is ordered.
Bottom Line
If the appraised value of the property that you have put an offer on is the same amount as your offer, it is finally time to close on your dream property! Congratulations! During the process of hunting for your home, we recommend continuing to work closely with a real estate professional during the process of the appraisal, as they are going to be familiar with the terminology as well as the process and can help explain it to you in detail and depth. Trust the real estate professionals at Property Sourced to guide you in finding and settling down in the home of your dreams in the many beautiful suburban neighborhoods that make up Manteca, CA, today.