{"id":1784,"date":"2014-02-14T10:24:56","date_gmt":"2014-02-14T17:24:56","guid":{"rendered":"https:\/\/homebuyinginstitute.com\/mortgage\/?p=1784"},"modified":"2024-08-24T09:34:39","modified_gmt":"2024-08-24T16:34:39","slug":"what-happens-during-home-appraisal","status":"publish","type":"post","link":"https:\/\/homebuyinginstitute.com\/mortgage\/what-happens-during-home-appraisal\/","title":{"rendered":"What Happens During the Home Appraisal Process: A Buyer’s Guide"},"content":{"rendered":"\n

If you’re using a mortgage loan to buy a home, you’ll probably have to go through a home appraisal process. Nearly all mortgage lenders require an appraisal to estimate the market value of the property being purchased, prior to approving the loan.<\/p>\n\n\n\n

But what happens during this process? How long does it take? And what are the possible outcomes you should prepare for?<\/p>\n\n\n\n

Let’s start with the short version. After that, we’ll take a deeper dive.<\/p>\n\n\n\n

During a home appraisal, a licensed appraiser will visit the property to evaluate its condition, size, location, and features. The appraiser compares the home to similar properties that have recently sold in the same area, in order to determine its fair market value. Mortgage lenders use this information to ensure that the home’s value supports the loan amount.<\/p>\n\n\n\n

What Happens During a Home Appraisal<\/h2>\n\n\n\n

A home appraisal is a professional evaluation of a property’s value. The final appraisal provides a fair market value estimate for the home.<\/p>\n\n\n\n

The “fair market value” is the price at which a property would likely sell in an open market under normal conditions.<\/p>\n\n\n\n

Mortgage lenders use appraisals to make smart lending decisions. Remember, in a typical mortgage scenario, the lender will invest a lot more money than the actual home buyer. So the lender will perform due diligence prior to approving the loan, including a home appraisal.<\/p>\n\n\n\n

How the appraisal process works in a typical home purchase:<\/strong><\/p>\n\n\n\n

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  1. The home buyer makes an offer to buy a house.<\/li>\n\n\n\n
  2. The seller accepts it, and the two parties sign a purchase agreement.<\/li>\n\n\n\n
  3. The buyer sends a copy of the purchase agreement to their lender.<\/li>\n\n\n\n
  4. The lender orders a home appraisal. They’re required<\/a> for most mortgages.<\/li>\n\n\n\n
  5. The appraiser will evaluate the “subject property” inside and out.<\/li>\n\n\n\n
  6. He\/she will compare the property to similar homes that have sold recently.<\/li>\n\n\n\n
  7. The appraiser estimates the market value and creates an appraisal report.<\/li>\n\n\n\n
  8. The appraisal report is sent back to the mortgage lender for review.<\/li>\n\n\n\n
  9. The next steps depend on whether or not the home “meets appraisal.”<\/li>\n<\/ol>\n\n\n\n

    Note:<\/strong> The home appraisal process can vary due to several factors, including the type of home loan being used. But it usually follows the steps and sequence outlined above.<\/p>\n\n\n\n

    What the Appraiser Looks for During a Visit<\/h2>\n\n\n\n

    The home appraiser will make note of the agreed-upon purchase price. This is the price the buyer has agreed to pay for the property, as written in the purchase agreement.<\/p>\n\n\n\n

    The appraiser will then review recent comparable sales in the area (or “comps”), to find out how much they sold for. This information helps the appraiser determine what the subject property might be worth.<\/p>\n\n\n\n

    The appraiser will usually visit the property being purchased to conduct a thorough on-site evaluation. He or she will examine the home inside and out. If the subject property has certain value-adding features that the comparable homes do not<\/em> have, the appraiser might adjust the market value upward.<\/p>\n\n\n\n

    During a visit, the appraiser will likely do some or all of these tasks:<\/strong><\/p>\n\n\n\n