How Much Does A Home Appraisal Cost?

How Much Does A Home Appraisal Cost?

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Things that can hurt a home appraisal

There are a few things that can hurt a home appraisal, so before your mortgage appraiser comes by for an evaluation, here’s what to look out for:

  1. Lack of curb appeal.Your curb appeal is what a potential buyer sees when they arrive at your home. A cluttered yard, bad paint job, overgrown grass and an overall neglected aesthetic may hurt your home appraisal.
  2. Broken appliances and outdated systems.By systems we mean plumbing, heating and cooling, and electrical systems. If any of these items are extremely outdated, functioning improperly or both, this will hurt your home appraisal.
  3. Market conditions.The state of the housing market will influence your home appraisal value. If it’s a buyer’s market, meaning there are more houses on the market than there are buyers, then you might receive a lower home appraisal based on recent sales near you. If it’s a seller’s market, meaning there are more buyers than there are properties, you may receive a higher home appraisal.
  4. Location.The location of your property is one of the biggest influences on your home value. A home located in a safe, quiet neighborhood in a good school district will receive a better appraisal value than the same home located on a main road by a train station, for example.
  5. Overall aesthetic.The appraiser can’t judge your home based on their opinion of your décor, but they can take the cleanliness and use of space into account. A tidy, aesthetically pleasing home that optimizes its space will likely perform better than one that’s unkempt.

Preparing for the Appraisal

You can help your appraiser by having all paperwork pertaining to your home available, including land surveys that were performed when you purchased the house and the title report. Include your most recent tax bill and any home inspection reports that have been done on your house. Know your homeowners association (HOA) fees and charges. Have the house as free of problems as possible: correct any interior or exterior faults. If you’ve made additions to the house, give the appraiser copies of your “permit” paperwork.

Who Pays for the Appraisal?

The borrower must pay for the appraisal regardless of whether the loan closes because the appraiser still did the work. While the fee may seem worthwhile if it enables you to get the refinancing terms that you want, it can seem like a waste of money if a low appraisal means that you can’t refinance.

Since lenders cannot discuss a home’s value or anticipated “target value” with an appraiser at the time of assignment, homeowners are not able to get an appraiser’s ballpark estimate of whether their home is likely to appraise high enough for them to refinance before they pay for the service, as they could before the new regulations. At best, you can search for recent comparable sales on websites such as Zillow and Redfin, but these records may be inaccurate or incomplete.

Another option is to ask a real estate agent to do a comparative market analysis (CMA) and provide you with printouts of recent comparable sales from the multiple listing service (MLS), says Bruce Ailion, an agent with RE/MAX Greater Atlanta. Ask nicely, as the agent will be doing you a favor—unlike with a home sale, they won’t earn any commission from your refinance.

What Hurts a Home Appraisal?

If you’re trying to buy or refinance a home, a good appraisal is key. If the appraisal comes in too low, you might not be approved, or you could face higher interest rates. A number of factors can negatively affect your appraisal, including:

  • Deferred maintenance
  • Dated or undesirable finishes
  • Not being up front about needed repairs
  • Comparable properties that are “outliers” (e.g., sold to relatives, under duress, or a foreclosure)
  • Market conditions
  • Appraiser experience

The Bottom Line

An appraisal determines the fair market value for a home. A professional appraisal is done by a licensed third-party appraiser who assesses the interior and exterior of the property, researches similar homes in the area and gives a final report. Be sure to spruce up your home to make it look more appealing to an appraiser.

Before your mortgage lender gives you a loan, they look at the appraiser’s report to ensure that you aren’t paying more for the home than its current value. Most single-family home appraisals cost $300 – $400, while multifamily units typically cost up to $600, though it could be more costly if you live in a rural area or have large acreage.

If an appraisal comes in low, buyers and sellers both have options. A buyer can renegotiate the sales price, and a seller can lower the home price or request another appraisal. While a client or seller can request a new report, that does not mean that a new report will be ordered or issued upon that request.

Appraisals are beneficial for everyone involved in the home buying process: For buyers, a home appraisal ensures they are paying the current fair market value. For sellers, an appraisal helps them price their home competitively. For mortgage lenders, an appraisal provides proof that a home is valued at the proper level to approve a mortgage.

Ready to apply for a mortgage or a refinance of your current mortgage? Get started with Rocket Mortgage® today.

What factors influence the home appraisal cost?

  • Property size: It generally costs more for an appraiser to assess a larger property.
  • Repairs: Expect to pay more for an appraisal of a home with extensive damage, because that will require extra effort on the appraiser’s part.
  • Amount of comps: If the home is isolated or has unusual features and there are fewer similar properties, the appraiser might charge more for the additional time it will take to evaluate.
  • Seasonal conditions: You might be charged more at specific times of year if conditions make it more challenging for the appraiser to access the property.

5. Appealing tax assessments

In many states, property taxes are calculated based on the fair market value of your home. If the value of your home listed on your property tax bill appears too high—if housing prices in your neighborhood or city have declined, for example—you may be able to appeal the assessment.

An independent appraisal could help strengthen your case, which ultimately could lower your annual property tax. The process for challenging assessments varies by state and locality, so be sure to check whether your state or locality allows homeowners to submit their own appraisals when appealing property tax assessments.

How To Prepare For Your Appraisal

In addition to checking the exterior and interior condition of the home, the appraiser will also look for anything needing repairs. Here are some areas to consider addressing before your appraisal:

  • Check your electric garage door opener to make sure it’s working.
  • Secure a handrail on steps or stairwells.
  • Secure second-floor doors with decks.
  • Secure a railing to any and all raised decks.
  • Ensure all utilities are functional with no safety issues.
  • Ensure water, electricity and air conditioning are functional.
  • Take care of any plumbing issues, roof leaks or stains.
  • Check for cracks in the walls, ceiling or foundation.
  • Check for water intrusion through the foundation.
  • Ensure your roof is sound and has at least 3 years of economic life remaining.

This is by no means a complete checklist of repairs that might need to be addressed before a home appraisal. It is, however, a list of the most common issues that may arise either before or during the inspection.

By addressing any repairs or upgrades before the appraisal inspection, you’ll be better equipped for a smooth home buying process and possibly a higher home value.

Takeaways

While avoiding an appraisal altogether might not be an option for those financing the purchase of their home, there are ways you can positively influence the outcome.

This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice. Opendoor always encourages you to reach out to an advisor regarding your own situation.

Make Sure the Appraisal Report Is Accurate

Although changes to the appraised value are not common, you can consider appealing the appraisal if you find a factual error in the appraisal report. For example, if the appraiser indicated two bedrooms instead of three bedrooms or there is an error in the gross living area.

If you didn’t receive the appraisal report from the buyer, contact the buyer’s real estate agent to request a copy. Then, carefully look through the appraisal report for errors.Were features accurately described? Did the appraiser adjust for differences between your home and the homes used for comparison purposes? When looking at the appraisal report, remember that if the home has a finished basement area, appraisers are required to report that area separately and not include it in the gross living area.

If you find errors, describe the factual errors in a letter and contact the homebuyer’s lender to ask about the procedure to fix errors. Do not try to contact the appraiser directly.

How Much Does A Home Appraisal Cost?

Most appraisals cost $300 – $450, with the national average being around $400, according to Fixr. However, the cost depends on a few factors, including:

  • The size of the home
  • The type of home
  • The home’s location
  • The condition of the property
  • The amount of work and time required

These factors affect the amount of time, effort and work that goes into the appraisal, which is what ultimately influences the borrower’s sale price. For example, a larger home or multifamily property has more space to walk through and assess than the typical single-family home.

A home that has unique characteristics makes it difficult to find comps because those features often make the house one of a kind.

If the home is in a rural area with nothing around it, the appraiser may have difficulty finding any other properties in the area, let alone one that is similar. This situation may require deeper research, which takes more time.

2. Refinancing your home

When you refinance your home, you’re actually replacing your old mortgage with a new one because your home’s value may have changed since you first bought it. For that reason, lenders will require an appraisal to ensure the new mortgage amount can be justified by what the house is worth today. If the home’s value has increased since it was purchased, you may be able to get cash out as part of refinancing. However, if it has declined, you may have difficulty securing a new loan.

Why is an appraisal needed?

An appraisal benefits both the homeowner and potential buyer.

“An appraisal is always in the best interest of the buyer as it will assess the value of the property and help the buyer have confidence in the purchase price of the home,” Boies says.

A property appraisal is also important for the homeowner or potential buyer because it establishes the parameters of the mortgage loan.

“Once the value of the home is established through the appraisal, the lender can make an offer based on the available loan-to-value ratio,” McClary says. “Property appraisals also help determine the cost of the loan. A well-maintained property can lead to a loan with a more favorable interest rate than one that is in disrepair because of the direct effect on loan-to-value ratio.”

Mortgage Appraisal

Ask your local bank if they can provide an appraisal on your home. You may be subject to a charge for the service, but you’ll know that the appraisal is one that lenders use to establish mortgage limits. The appraiser will asses both the interior and exterior of your home, the neighborhood and your community before arriving at a price. Work with the appraiser and point out all the upgrades and positive features you’ve installed.

How is a home appraised?

During a home appraisal, a licensed appraiser conducts a thorough inspection of the property.

The appraiser will consider all factors that could affect the property’s value. These factors include the condition of the property, any upgrades or additions made to the property, the size of the lot and “comps” or recently sold properties of comparable size and condition in the same market.

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