Appraisal Definition
When buying a home, an appraisal is an unbiased estimate of the fair market value of a property conducted by a licensed appraiser. Lenders typically require an appraisal to ensure that the property being purchased is worth the amount of money being loaned.
1. What criteria do appraisers use to determine the value of a property?
Appraisers consider factors like the property’s size, condition, location, amenities, recent sales of comparable properties, and market trends.
2. Who orders the appraisal when purchasing a home?
The lender typically orders the appraisal to protect their investment by ensuring the property’s value matches the loan amount.
3. How much does a home appraisal cost?
The cost of a home appraisal can vary depending on the size and location of the property, but it generally ranges from $300 to $600.
4. Can a buyer choose their own appraiser?
In most cases, the lender selects the appraiser to ensure an unbiased valuation of the property.
5. What happens if the appraisal comes in lower than the purchase price?
If the appraisal is lower than the purchase price, the buyer may have to make up the difference in cash, renegotiate with the seller, or walk away from the deal.
6. How long does a home appraisal take?
On average, a home appraisal can take anywhere from a few days to a week to complete, depending on factors like property size and location.
7. Is an appraisal the same as a home inspection?
No, an appraisal focuses on determining the fair market value of a property, while a home inspection looks for structural issues and potential repairs needed.
8. Can a buyer appeal a low appraisal?
Buyers can appeal a low appraisal by providing additional comparable sales data or requesting a second appraisal, although success is not guaranteed.
9. What happens if a property appraises for more than the purchase price?
If a property appraises for more than the purchase price, it can benefit both the buyer and the seller by providing a higher equity position and potentially reducing the buyer’s down payment.
10. Can a buyer see the home appraisal report?
Buyers are entitled to receive a copy of the home appraisal report from their lender, typically upon request.
11. Is an appraisal required for all types of home purchases?
While appraisals are typically required for financed home purchases, cash buyers may choose to waive the appraisal if they are confident in the property’s value.
12. How often does a home appraisal need to be done?
A home appraisal is typically required for each new purchase or refinance transaction, as property values can fluctuate over time.