According to the National Association of Realtors, 18% of real estate contract delays resulted from appraisal issues as of June 2020. This comes second to issues related to obtaining finance, which account for 37% of real estate contract delays. Appraisal issues also account for 9% of all real estate contract terminations. You can’t get around a home appraisal mainly if a buyer is taking a mortgage to purchase your property. Even if there’s no magic that you can use to raise your home’s value, it’s important to educate yourself about the home appraisal process.
Before a Home Appraisal
At what stage does a home appraisal occur? A home appraisal occurs after you accept an offer, typically within seven days after the inspection of your home. After you and the buyer agree on everything including the price, credits, and repairs, the lender sends the appraiser to determine the property’s fair market value.
A seller may opt for a pre-listing home appraisal. A pre-listing appraisal enables the seller to quote a price that will get them all the way to closing. A pre-listing home appraisal would be particularly important when:
- The real estate market is unstable and the prices are changing fast
- You have a unique home that is hard to find comps for
The Cost of a Home Appraisal
If you check online, you might come across home appraisal packages ranging between $300 and $400. However, in almost all parts of the U.S., the minimum cost for a credible home appraisal ranges between $450 and $550. If a home appraisal is for the purpose of a loan, a buyer or seller can’t order an appraisal through a company of their choice. Lenders use a third-party appraisal management company to ensure that they get an unbiased opinion. The buyer pays the home appraisal fee, which is set by the lender and not the appraiser.
The Importance of a Home Appraisal?
The objective of a home appraisal is to provide an impartial and independent real property analysis. Even if the lender instructs the appraiser, the buyer benefits from an appraisal because it prevents them from paying more for a home than it’s worth. An appraisal ensures that a buyer buys the property at the right value to ensure that they don’t put their financial future in jeopardy.
When an Appraisal Comes Under Contract
There are several reasons why a home fails to appraise:
- When the contract price is above the market value
- The appraiser identifies an issue with a home that impacts its value
- An inexperienced appraiser who does not know the area
Preparing for a Home Appraisal
Before a home appraisal, you should make a house look presentable. Below are some tips that can help you be prepared for the appraisal:
- Clean your home thoroughly
- Tidy up your yard
- Secure all your pets
- Touch up the paintwork
- Don’t sprinkle the lawn to avoid a muddy lawn
During a home appraisal, appraisers consider many things including the home’s age, location, structure, square footage, and functional layout among others. Depending on the size and features in your home, an appraisal may take between 15 minutes and several hours. For more information on home appraisals, contact Abo Capital.