February 26th, 2015 at 2:00 pm

Home appraisal process

Most buyers and sellers know a home appraisal is required as part of a real estate transaction. Not all of them realize, however, that the appraisal’s results pretty much run the show. The only exception is an all-cash deal.

An appraisal is an unbiased professional opinion of a home’s worth. In all 50 states, home appraisers are required by law to be licensed or certified. Each appraisal encompasses a variety of factors. Typical data for a single-family home include recent sale prices of similar properties nearby, amenities, square footage, number of bedrooms and bathrooms, floorplans, and condition of the property’s interior and exterior. Proximity to transportation and the community’s school district might even be factored in. Appraisers consider these and other information to determine the home’s fair-market value.

Why is this so important? Primarily, the appraisal helps the bank protect itself against lending more than it might be able to recover if the borrower defaults on the loan. Most lenders don’t want to be stuck with a home to resell. That’s why they usually will only approve a loan for a residence that appraises for the full sales price or higher.

What buyers should know:
The appraisal can serve as protection for you as well. The lender is required to provide a copy of your appraisal as soon as the mortgage company approves the loan amount. You can opt out of receiving a copy of the appraisal, but probably shouldn’t. Have your real estate agent review it with you. If the value is higher than the price you negotiated for the home, you benefit right away with more equity in the property than you expected. If the appraisal is lower than the sales price, you and the seller must honor the contract you and your agent negotiated. If the contract is contingent on an appraisal, you might be able to withdraw your offer and have your earnest-money deposit returned. In effect, the appraisal has saved you from paying too much for a home you might not have been happy with.

What sellers should know:
Throughout the transaction, keep in mind that the appraisal also is a critical part of the process for you. The buyer’s lender will select an appraiser to evaluate your home, and the buyer will pay the appraiser’s fee, usually in the $300-$400 range. You will want your home to appraise for as high a value as possible to avoid any issues with your buyer obtaining a mortgage, such as misstated square footage or unreported plumbing issues. Here are some tips that professionals advise for achieving that goal:

Consult your real estate professional for additional tips.


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  • Drew says:

    Great advice to keep pets away. Even if the appraiser loves pets, you don’t want to complicate their job by making them deal with yours while they are trying to work. Thanks for the tips!

  • Lisa Schultz says:

    Thank you Drew! Agree on the pets, although we love them, sometimes it can complicate the process.

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