If you’ve ever bought or sold a home, or are currently in the process, the term “appraisal” is likely one with which you’re very familiar. An appraisal is a process that determines the fair market value of a home or property for sale. It’s also a crucial part of whether or not a lender decides to approve a home loan. If the appraisal comes back lower than the asking price, the loan request will likely be denied.
What Goes Into a Home Appraisal?
The lender is the party that orders the appraisal. An approved appraiser is contracted to complete the process, and visits the property to perform the assessment. A number of things factor into the final appraisal value of a property, such as the following:
- Condition of interior and exterior portions of the home
- Overall size of the home and lot
- Age and location of the home
- Square footage of each room
- Number of bedrooms, bathrooms, etc.
- Features, upgrades or improvements made to the home
- Unique geographic aspects, like water-front, beach or mountain views
- Comparable information (recent home sales in the neighborhood, zip code and surrounding area)
If the Appraisal Comes Back Low, Should You Spring for a Second?
Typically, the seller pays for the appraisal. However, some lender’s require the buyer to cover this cost. The seller wants the highest price possible, but the buyer also wants to be approved for the loan. If the appraised amount comes back off the mark, either party has the opportunity to order a new appraisal, at their own expense. According to HomeAdvisor.com, the national average cost of a home appraisal is currently $316. (The average for the Hampton Roads area is a bit higher, at around $450.)
Appraisals are an integral part of the home buying and selling process, and almost always required for residential real estate transactions.
Have a question about a real estate transaction or the closing process? Contact the Linear Title & Escrow team today at (757) 340.0340!