When Do I Need a Home Appraisal? If you’re buying a home with a mortgage, selling your home to a buyer who is using a mortgage, or pursuing most types of refinancing for your existing mortgage, a home appraisal will be an important part of the transaction.
What Exactly Is a Home Appraisal? An appraisal is an objective professional opinion of your home’s market value. In a sale to a buyer who is using a mortgage, the lender depends upon the appraisal to confirm that the contract price is appropriate to the home’s location, features, and condition. In a refinance, lenders want to make sure that the loan amount is correct, given the home’s present value.
What Does the Appraiser Do? Appraisers visit a home for as little as 30 minutes, up to a few hours. They measure dimensions, check out the amenities, judge the overall condition inside and out, and photograph the exterior, the garage, and every room. They then look up the records of comparable homes in your neighborhood that have sold recently. From there, it will take a few days to a week or so to produce the appraisal report.
What Does the Appraiser Focus on? The list includes: location; total room count; exterior and interior condition; functionality of the room designs and layout; age and condition of the mechanical systems; improvements that update kitchen, bath, windows, roof, heating, electrical, and plumbing systems; exterior amenities, including decks, porches, and garages; unappealing elements, such as exterior features that don’t fit with the neighborhood.
Can I Do Anything to Help Get a Higher Appraisal Value? Yes. Make sure your property is easy to inspect—neat, clean, and uncluttered, including, if applicable, the basement and garage. Remove or contain pets, and mask any pet smells from bedding or litter boxes. Mow the lawn. Touch up paint, inside and out. If town tax records are incorrect, tell the appraiser. Mention features that could add to your home’s value but may not be readily apparent.
What Is the Appraisal Value Based on? The final appraisal number is largely determined by recent sale prices of comparable properties.
Can I Challenge a Low Appraisal? You can appeal the appraisal in a letter to the lender, but you’ll need evidence of a significant error. This could be: incorrect square footage or room count; no mention of a valuable amenity, such as pool, spa, or gym; ignoring higher value comps; or using comps with inferior school districts, on busy streets, or that were distressed sales.
Which Types of Refinancing Do Not Require an Appraisal? Only Streamline Refinance programs from the FHA and VA do not require an appraisal, and an appraisal may not be required for a USDA Streamline Refinance. Also, lenders may do a conventional rate-and-term refinance with an appraisal waiver if you’re not taking cash out. In some instances, lenders may use Automated Valuation Models (AVMs) or previous appraisals and not require a new one.
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