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There's a lot that goes into buying or selling a home. While our awesome mortgage team can walk you through it, we're here to help, too! Home appraisals are a large part of the buying or selling process that typically fly under the radar. We've got the low down on what an appraisal is, why it's important, and how it works.
What is an appraisal
Typically, a home appraisal is required before buying or refinancing a home. But what is an appraisal? Basically, it’s an unbiased and educated guess as to how much your house is worth. Appraisals can consider anything from recent updates, condition of the property, location, similar properties, and more.
To ensure the appraisal is fair, it is done by a neutral party. Appraisers are highly trained and their businesses are heavily regulated so you know your home is in safe hands.
Why are appraisals important?
Home appraisals are an extremely important part of buying or refinancing a house. Not only will it determine what the house is truly worth, but it will also determine how much a mortgage lender is able to lend you.
If all goes well, the house will be appraised for roughly the same amount as it was sold for. If the house is appraised much lower, you have the option of getting the appraisal reviewed. A review entails a new appraiser either looking over the notes and data then coming up with a new appraisal or visiting the home and giving a new appraisal all together.
Who pays for it?
The buyer typically pays for the home appraisal at closing, however there is always the option to pay up front. Home appraisal prices vary depending on the size of the property, type of appraisal, age of home, and more. For an average sized home, the appraisal should be between $250-$400.
What’s the difference between that and a home inspection?
A home inspection is important to protect the buyer from purchasing a house with structural issues. A home appraisal protects the buyer and the lender, but especially the lender, from lending or paying over the value price of a home. Home inspections search for unobservable issues like plumbing, mold, heating, etc. Appraisals focus on the easily observable things like the age of a hot water heater or the condition of the floor tiles.