A home appraisal plays a crucial role in the home buying process, especially if you’ll be securing a mortgage loan. This is part of the lender’s due diligence, as they want to be sure the home is worth the amount of the loan you are asking for. Doing so helps protect both the buyer and lender from overpaying for the property.

Home appraisals can raise a lot of questions for home buyers. This blog explores some of the most common questions about home appraisals and how an appraisal fits into the home buying process.

What is a home appraisal?

An appraisal is an unbiased real estate appraiser’s professional opinion on the fair market value of a home.

Do I need a home appraisal?

A home appraisal is necessary if you are applying for a mortgage to buy a home, refinancing your existing mortgage, or selling your house to anyone other than an all-cash buyer.

When buying or selling a home, the appraisal is used to determine whether the home’s contract price is appropriate, given the home’s condition, location, and features. In a refinance transaction, the appraisal assures the lender that it isn’t loaning the borrower more money than the home is worth.

When is the appraisal done when buying a home?

You’ve found your dream home, made an offer, and the seller has accepted. If you’re getting a mortgage loan, the lender will require a full loan application from you as the borrower. Once you’ve submitted the full loan application, the lender will coordinate the appraisal.

What do they look for in a home appraisal?

A qualified appraiser will consider several key factors during the process. These typically include:

• Property features

The appraiser evaluates the age of the home, square footage, lot size, floor plan, bedroom and bath count, overall condition, and any unique features or upgrades that might affect the value.

• Location

Factors like the neighborhood, proximity to amenities, schools, parks, public transportation, and potential adverse conditions, such as fire or flood, will all be considered.

• Comparable sales

Recent sales data and the average values of similar homes in the area (often referred to as “comps”) are used to gauge how the property being appraised compares in terms of size, features, and condition.

• Market conditions

The appraiser will take into account the current state of the local real estate market, including supply and demand factors, trends, and economic indicators that might affect the property’s value.

How long does a home appraisal take?

Several factors can influence the appraisal process timeline, but on average, it will take seven to 10 days. The process can take as long as four weeks in a busy real estate market.

• Scheduling an inspection (2 – 14 days)

Once your offer has been accepted, the lender will contact a third-party appraiser to schedule an inspection. Depending on appraiser availability, the inspection may happen in a couple of days or a couple of weeks.

• Property inspection (30 minutes to 3 hours)

The appraiser will visit the property and spend time inspecting the interior and exterior, measuring square footage, and evaluating the home’s features and fixtures.

• Research and analysis

After the onsite inspection has been completed, the appraiser will collect data about comparable sales in the area then research and analyze all relevant information to determine the property’s value.

• Appraisal report

Once all the necessary data has been collected and analyzed, the appraiser will compile a detailed report and submit it to the lender for review. The lender includes the report as part of the underwriting process to ensure the appraised value aligns with the loan amount and other loan requirements.

How much does a home appraisal cost?

The cost of a home appraisal will vary based on square footage, property size, home type, location, and property condition. These factors all affect the time, effort, and work that will go into the appraiser’s assessment. On average, a home appraisal can cost anywhere from $300 to $600+.

Who pays for the home appraisal?

If you are applying for a mortgage loan to buy a home, you, as the borrower, are responsible for covering the cost of the appraisal, and it is usually included as part of your closing costs. The same is true if you are refinancing your mortgage. If you are selling your home and the buyer’s lender requires an appraisal, the buyer will be responsible for the fee.

How do appraisals differ for new construction homes?

The appraisal process will vary when you’re buying a new construction home as there are different factors an appraiser will evaluate, such as:

• Building plans
• Upgrades and customizations
• Stage of completion
• Cost breakdown of total expenses to build the home
• Neighborhood
• Quality of materials
• Compliance with building codes

Overall, the appraisal of new construction homes involves both the evaluation of the property's physical features and the broader context of the local real estate market.

Buying a new home can come with a lot of questions. At Brookfield Residential, we’re committed to ensuring our customers feel comfortable, informed, and in good hands from the first time we connect to long after they’ve moved into their new home. Our team is continuously committed to doing the right thing, cultivating an exceptional customer experience, and creating the best places to call home.

Explore where we build and connect with our sales team when you’re ready to learn more. We’ll be expecting you!