When the potential home buyer involves a lender, an appraisal will become necessary. That way the lender will want to independently know how much the home is worth to help them determine if they should approve the loan request. Since the home loan is riding on the appraiser’s report, it might sound like it would be a stressful time, but it doesn’t have to be – and won’t be when if arm yourself with the facts. Here are the twelve key points you, as the home seller, should know about the appraisal process:
- How long does a home appraisal take? A home appraisal is much shorter than a home inspection, typically lasting only about 30-55 minutes.
- What happens during the appraisal? During the visit, the appraiser will walk through of the property, noting everything that could either add or subtract from your home’s value. To document the condition of the property, the appraiser will also take pictures of each room, the garage, and the outside. They’ll also measure the home and lot, if applicable, and examine its overall condition, amenities, and upgrades.
- How does the appraiser determine value? After the inspection home, the appraiser then analyzes comparable homes that were recently in your neighborhood against yours to determine a baseline value. They look at the sales price of these comparable homes and the structural condition of them, taking into account age, condition, improvements, and the market, and contrast these factors with your home to determine the monetary value of your home.
- Do I need to prepare for the appraisal? Yes, while it is very hard to change the outcome of an appraisal, having the property in “showing” condition will increase the chances of the best appraisal report. To start, you should follow the steps in my article about putting your home on the market. In addition, if you have a survey of your property, it is always appreciated by the appraiser.
- At what point in the home selling process does the appraisal happen? After the attorney and inspection period is completed, the buyer’s lender will order the appraisal.
- How do we know they’ll be looking at the properties that are truly comparable? While an appraiser is free to find their own listings, the Jackie Mack & More team will provide the professional with the comparable sales data, floor plan, survey (if available), and your list of improvements that we used when setting the asking price.
- How long does it take the appraiser to prepare the report? It typically takes a week.
- Who pays for the home appraisal? Simple, the buyer. Home sellers do not need to pay even a penny for the appraisal. However, should you want an independent appraisal of your home, so you know its value in the eyes of an appraiser, you’d have to pay for it.
- Will I get a copy of the appraisal? No, since the buyer pays for the home appraisal, it is their report. They own it. If you want to have an independent appraisal of your home, you will need to hire your own appraiser, a step which often doesn’t make sense since you are selling the home.
- What happens after the report is completed? The appraisal is sent to the buyer’s lender and it becomes part of the loan package that gets forwarded to the underwriter for the final approval of the buyer’s loan.
- What if the appraisal comes in lower than the contract price? As seller of the home, you have three options: 1) Request that the appraisal be contested by the buyer, asking for a new appraisal to be conducted; even if granted, rarely does the contested appraisal price change; 2) You, the seller, can lower the price; or 3) If the buyer still wants the home and keeps with the negotiated sale price, the buyer can simply increase their down payment amount to decrease the loan amount. Keep in mind that with a lower appraisal amount if the home seller does not lower the price or the buyer cannot increase the down payment, the loan won’t be approved, which means the buyer will be able to cancel the contract if it is within the mortgage contingency period.
- If the buyer is paying cash, is there an appraisal? No, not having to go through a home appraisal is one of the benefits of a cash offer.
As you can see, process is straightforward and is easy for the home seller. Of course, the Jackie Mack & More team will be with you every step of the way. And if you have any questions, we are always here to answer them. After all, our mission as your representative is to make the process as smooth and as stress-free as possible.