After you’ve made it through the inspection period, you move onto the second and final property analysis, the appraisal. If you’re using a loan to purchase the property, the bank will require an appraisal to ensure that they’re not (and you’re not) overpaying. The bank will send out a third party licensed appraiser to assess the current true market value of the home. It is typically the buyer’s responsibility to pay for the appraisal and will be paid before it takes place or will be looped into the fees due on closing day. Appraisal prices depend on many factors of the property and location, but most commonly range from $400-$800.
The best way for your Realtor to gauge a home’s value before the official appraisal is to look at “comps.” Comps are comparable homes that have recently sold in close proximity to the property in question and they’re weighed heavily in appraiser calculations. They are the most accurate data of what people are willing to pay for homes in the current local market, rather than what sellers presume their home’s value to be. But what if there are differences between the comps and the home in question? Appraisers use adjustments to account for the value differences in bedrooms, bathrooms, square footage, acreage, fireplaces, pools, garages, etc.
In addition to these adjustments, appraisers take into account local market trends, quality of home finishes, property type, functionality of the home, and more. Once they finalize their value assessment, you will receive the appraisal report with your purchase price, the appraised value and any conditions. Wondering how long until you receive your appraisal? Chat with your Lender about the appraisal date and estimated delivery.