Real estate transactions are all about price. Sellers are eager to make as much money as possible on their property, while buyers need to know how much they’ll have to pay for their dream home.
With home prices in the U.S. averaging $269,039, it isn’t a transaction to take lightly. Whether you’re a current homeowner looking to sell your home, or an eager buyer looking to purchase a property, it’s normal to have questions about what to expect and how to prepare for such a significant transaction.
One of the most crucial parts of determining how much a given property will sell for is the home appraisal. So today, we’re taking a closer look at what you can expect during the home appraisal process.
What is a Home Appraisal?
Home appraisals are specialized reports that determine the true market value of a property, ensuring that the transaction is fair for both sides of the deal.
Appraisals benefit both parties. Sellers benefit from knowing what amount to expect when the transaction hits this stage. Buyers benefit by learning the true market value of what they’re purchasing.
What’s the Point of an Appraisal?
The amount of money that sellers can get for their properties isn’t random. Rather, it’s the outcome of the home appraisal. In a home appraisal, a trained and licensed appraiser inspects the entire property to determine what the home is really worth.
After the inspections and assessments have been conducted, the appraiser takes that information and creates an official home appraisal report. That report outlines what a property is truly worth, as well as the information that led to that conclusion.
In many cases, this isn’t the same amount of money advertised on the listing’s price tag. The point of an appraisal is to make sure that a home isn’t being sold for more — or less — than it’s really worth.
The buyer’s lending institution uses the appraisal report to ensure that they’re giving buyers the appropriate financing to purchase the property.
In simple terms, the point of an appraisal is to secure every party in the transaction: the seller, the buyer, and the lender.
When Does the Home Appraisal Happen?
The home appraisal happens after the seller receives an official offer from an interested buyer. Once the buyer and seller agree on the listing’s price point, the buyer’s lender issues an appraisal to set a fair market value.
When you’re first going to sell your home, it’s important to be fair in how you price it. Data shows that 18% of contract delays and 9% of contract terminations were the result of appraisal issues in 2020.
The more accurately a seller can list their home online, the less likely they’ll be wasting time with dead-end offers.
Who Pays For It?
Buyers pay for the home appraisal. The average cost of a home appraisal in the United States is around $335. But this price can range from $200-$600 depending on the size of the home, the condition of the property, location, and how much time and effort the appraisal requires.
The buyer usually pays for the appraisal through their lending institution, so sellers don’t have to worry about the bill. Lenders choose a third-party appraisal company of their choice to ensure a fair, unbiased outcome.
What Takes Place During the Appraisal Process?
Appraisers inspect the full picture of the property. The process looks at the total combined condition of the property to gauge the accurate market value of the home. Both internal and external factors are taken into consideration, as well as the home’s history.
Appraisers are looking at the home’s surrounding neighborhood, location, and age. They also consider the structure, building quality, construction condition, and integrity of the roof and foundation.
On the inside, appraisers look at the floorplan, the general layout, the number of bedrooms and bathrooms, available amenities, health and safety factors, utilities, and general condition. Appraisers also look at how well the home is compliant with industry codes.
After the appraiser has gathered all of the necessary information, they leave the property and begin working on the appraisal report.
How Can Homeowners Prepare?
Taking time to prepare for the appraisal can make a difference in the final value of the home. Sellers can boost their deal’s profitability by taking care of a few things before the appraisal.
Here are ten ideas to consider:
- Thoroughly clean the inside and outside of the property.
- Remove any clutter that’s blocking access to structural features.
- Purchase new, eco-friendly appliances to replace outdated ones.
- Touch up any paint, inside and outside.
- Make any pending repairs.
- Take some time to improve your yard.
- Fix any squeaky windows or wiggly doorknobs.
- Make a plan to clear the home of your kids and pets for the afternoon while the appraiser comes.
- Store away any junk around the house.
- Clear as much space as possible.
Sellers should think about how they can show off the best of their home before the appraiser comes and writes their report.
Ready to Sell Your Home, or Shop for Homes for Sale?
Learning about important steps in the process, such as the home appraisal, can help both buyers and sellers optimize their real estate experiences — helping their real estate goals turn into a reality.
If you’re a buyer shopping the housing market for homes for sale, see what HomeFinder has to offer. Browse through our premier listing portal, featuring available homes for sale all over the country.