Looking to buy, sell, refinance, or borrow against a home? Undergoing an appraisal is indispensable for all of these exchanges—appraisals are how homeowners establish the current home value.
But appraisals are different from the estimates you can get from your real estate agent, the local tax assessor, or your own research. Federal law mandates that an appraisal be conducted by a home appraiser who has no connection or stake in the home buyer’s, seller’s, or mortgage company’s affairs.
A home appraisal refers to the entire process wherein a licensed home appraiser estimates the value of a property.
You can expect a home appraisal to take a minimum of two days. More commonly, appraisals are completed between one and two weeks. This turnaround time depends on:
If you are wondering, how much does a home appraisal cost, this also depends on a variety of factors such as the size of your property, condition of your property, and more.
It’s important to note that the home appraisal process starts with a site visit. Afterward, the appraiser must review the property and analyzes its value based on factors like recent comparable home sales. Below, we take a look at each stage of the home appraisal process and what to expect from them.
The home visit is the most important component of a home appraisal in terms of identifying the specific value of your unique property. Depending on the size, condition, and features of your home, site visits can take anywhere from 15 minutes to several hours. Typically, visits last between 30 and 45 minutes.1
While at the property, the appraiser will work through a checklist of features and home conditions to observe, including:
In the course of their visit, appraisers may take photos and measurements of interiors and exteriors to review later.
While site visits may not be the most exhaustive part of the appraisal process, home appraisers will be on the lookout for:
One of the most tedious parts of the home appraisal process is the home inspection. Many people confuse a home inspection for an appraisal but it is important to understand the differences and similarities between a home appraisal vs inspection.
After their site visit, home appraisers still have some research to complete.
First, they’ll pull together the photos and measurements taken on-site visit, along with an explanation of how those measurements and square footage were calculated. Afterward, they’ll begin compiling a report and analysis with the following components.
By identifying comparable sales in your area, appraisers can gauge the value of a home amid the competition. They’ll look for recent sales that match:
To fine-tune their market comparison, they’ll consider how your property may be set apart from each comparable sale. These distinctions could include:
Depending on which report model they’re using, appraisers may need to compile and attach specific exhibits to their appraisal report to supplement the photographs and measurements taken during the home visit. These may include:
Once they’ve assembled a data package, appraisers synthesize their materials into a single report to come up with a final appraisal value. Along with comps and specific property details, the appraiser is responsible for integrating current residential real estate factors and neighborhood trends into the dollar value they land on.
These real estate factors could include:
Additionally, they may showcase:
There are three approaches licensed appraisers may use to support the value estimation they ultimately arrive at. Depending on which method they use, it’s possible to come up with three entirely different dollar figures in their final report—which is why it’s so important for homeowners to understand what distinguishes them.
This is the simplest approach an appraiser can take. While other appraisal methods treat comparative sales as a variable in their formula, this method treats it as the single most important appraisal factor.
The optional cost approach considers what it would take to rebuild the property in question. Because appraised values are critical to homeowners insurance and mortgage lending, this is a way of exploring a property’s potential future value (rather than predicting what a buyer would pay for it in the next few months).
To apply the cost approach, appraisers plug details on special home features into their calculations. This enables them to estimate what it would cost to, for example, rebuild a two-bath, two-bed home with an asphalt shingle roof, concrete foundation, oak hardwood flooring, and standard HVAC.
Note that there may be a significant difference between the sales comparison and cost approach figures. This is particularly true for older homes, nonstandard homes, or those made of materials that aren’t commonly used in today’s new construction industry.
The income method is applied when all or part of the property may be used to generate a rental income. It analyzes gross rental income against expenses to predict how much profit may be generated from renting a home.
With this approach, the condition, features, and surrounding neighborhood of a property are central to its value. Those factors inevitably affect:
If you’re a homeowner looking to attract a buyer pool that includes both families seeking a home and investors in search of rental properties, it’s in your interest to request an income valuation as part of your appraisal.
If you need an appraisal done quickly, there are a few ways to trim down the turnaround time. You can try:
While you may be able to hasten the process, a more pressing question may be whether you can improve the accuracy of your home appraisal. Homeowners have a vested interest in achieving maximal appraised value on their homes—the more value is considered, the greater the potential for a higher sale price tag (and greater home equity).
To accomplish this, you can showcase your home’s best assets and provide your appraiser with documentation to verify their value. This way, your appraiser will be less likely to “guesstimate” or skew low with respect to property condition, or high in regards to renovations and maintenance estimations.
To get a headstart, consider going over this home appraisal checklist so that you can collect information on:
Ultimately, the more knowledge you can give your appraiser about your home, the better they’ll be able to see its real value.
If you’re considering selling your property but aren’t ready to give up your home, it’s time to explore Truehold’s Sale-Leaseback. We partner with homeowners who want to unlock their home’s full market value without packing up and moving before they’re ready.
With our Sale-Leaseback solution, you can free up capital for travel, a promising new investment, or paying off debt—whatever you choose. And by taking stressors like home repairs and maintenance off your plate, you will be able to reduce your monthly housing costs.
To review your property details and financial goals, connect with a trusted advisor today and see if Truehold is a good fit for you.
Uphomes. 11 Things Appraisers Look for During a Home Appraisal. https://uphomes.com/blog/what-do-appraisers-look-for/