The appraisal is a crucial component of purchasing or refinancing a home. According to the National Association of Realtors, appraisal issues are the second most common cause of closing delays. Therefore, it is essential to understand what an appraisal is and why it is a part of it. When purchasing or selling a home, an appraisal ensures that the purchase or sale price is in line with the property’s fair market value. The mortgage process and how it can impact your mortgage.
What is an appraisal of a home?
A home appraisal is a professional, unbiased estimate of how much a home or other piece of property is worth. This makes sure that the buyer doesn’t pay more than the home is worth and that the mortgage lender doesn’t lend more than the home is worth. Since the home is the borrower’s security, how accurate the appraisal is very important. When a mortgage is refinanced, the lender will have the home appraised to ensure it is worth what it is on the market.
How much does an appraisal cost?
An appraisal by professional costs between $300 and $450 for the average single-family home. Even though the lender orders the appraisal, the borrower usually pays the fee unless another deal is made. This fee is generally included in the closing costs of a loan. The price can increase if the house is very big or has strange features. For example, the fee could be $600 or more for a large property or a home with more than one family. “The lender usually pays the appraiser, but the homeowner or whoever is borrowing the money pays the lender,” says James Crumpler, a licensed real estate appraiser in West Palm Beach, Florida. “The client is the person who orders the appraisal.”
How do home appraisals work?
After receiving an order from a lender, a licensed appraiser will schedule an appointment with the homeowner or do the appraisal remotely. Appraisers adopted a virtual strategy from the onset of the epidemic, including doing exterior-only evaluations, and are likely to continue doing so.
“With an exterior-only appraisal, you often take photographs and depend exclusively on public documents,” adds Crumpler. You rely on a third party for interior viewing since you take exterior shots and request that the owner/occupant send you interior photographs of each room. Plus, to analyzing the property’s physical condition, the appraiser examines recent sales of comparable homes in the region. This data can be obtained from various sources, including the local multiple listing service (MLS), tax records, local real estate brokers, and county court records.