Home appraisals have been a hot topic this month, so we thought we would take a moment to outline what a home appraisal is, and what the process looks like, specifically for buyers in today’s market.
What is a home appraisal?
A home appraisal is where a licensed real estate appraiser acts as a neutral third party to a transaction and determines the value of your property through a detailed market analysis. When conducting an appraisal, an appraiser will compare the subject property to the recent comparable sales also known as comps, in order to establish a value. Once an appraisal has been completed, it is then sent to the mortgage lender.
What does an appraiser take into account when conducting appraisals?
- General condition and build quality of a home
- The home’s location
- Age of the home, and whether or not it has undergone significant remodeling
- Quantity of bedrooms and bathrooms
- Floor plan functionality
How long does the appraisal process take?
Traditionally, a real estate appraisal takes 30 days to complete. In today’s fast-paced and competitive market, it is common for buyers to order a rush on an appraisal for an additional fee in order to help strengthen their purchase offer by reducing their loan and appraisal contingency timeline.
What should home buyers know about the appraisal process?
If you are a buyer that is obtaining a mortgage for your home purchase, an appraisal is important because it ensures your lender that the price you have offered to pay for the home is in line with the home’s value.
Most real estate offers will include an appraisal contingency. This contingency gives buyers an out or an opportunity to further negotiate should the home appraise lower than your purchase offer. If a home is appraised below your purchase offer price, this may impact your ability to obtain financing. This is one of the many reasons that it is important to work with a realtor who knows the market and takes the time to look at comparable sales before you submit an offer. This way, you have ensured that you do not overpay or run into financing issues during the escrow process.
Torben Yjord-Jackson – Realtor
EXP Realty of CA, Inc.
License # 02050831