Whether you are buying or selling a home, it's not uncommon to be nervous when you hear the words "home appraisal." Home appraisals are a necessary step in buying or selling a home, important because they help determine the value of a home. Lenders take this information into account when deciding whether and how much financing they will extend to a homebuyer to purchase a specific property.
What is a home appraisal?
Simply defined, a home appraisal is an assessment of a property's value based on its condition and features as well as recent, similar home sales in the area. Appraisals are conducted by certified professionals licensed to determine home value.
What is the difference between an appraisal and an inspection?
While an appraisal is designed to determine a home's overall value, taking into account the condition of the property, an inspection is intended to protect a potential homebuyer from any problems with the property that could result in repairs and expense down the road. Home inspectors perform a more thorough examination of home systems like heating and plumbing and make certain that they meet local code.
What does an appraiser examine?
Beyond verifying the existence of the property in question, an appraiser also determines its square footage (excluding finished basements), substantiates any improvements or upgrades that have been made, and assesses any damage, such as water in the basement or cracks in the foundation. Appraisers also take into account external factors such as the property's location, recent foreclosures in the area, and changes in the neighborhood or general area that could affect home values in a positive or negative manner, including developments from parks and public works to landfills.
What does a home appraiser ignore?
Appraisers are not in the business of looking at the cleanliness of your house, so don't panic if your windows aren't clean. They won't test your appliances or climb onto the roof to examine your chimney.
How long does a home appraisal last?
Home appraisals do "expire" after several months (usually 6 months), at which time, a new appraisal must be conducted in order to determine whether the value has changed. Fluctuations in the market, the changing complexion of a neighborhood or town, and certainly any upgrades or changes to the property itself can change a home's value within a relatively short period of time, so appraisals are meant to stand only for the short term.
Can I dispute an appraisal?
Certainly, if you feel an appraiser has omitted or incorrectly represented information in his or her report. If you feel that you have a case against an appraisal value, contact your lender to see what your options might be. Your lender should allow for a second appraisal from a different, approved agent. If negotiations with your lender or appraiser don't pan out, you also have the option of contacting the state's licensing agency for appraisers to file a complaint, but you should have ample evidence that the appraiser did not accurately represent your property.
It's important to note that in order to avoid a low appraisal, a home should be priced correctly in the first place. A correctly-priced home leads to financing for the buyer and a successful sale for the seller. If you have doubts about pricing your home for sale or the asking price for a property you're interested in, consult your real estate agent.
