When you find a home that’s perfect for you, it’s understandable that you want the buying process to go as quickly as possible. But completing a real estate transaction takes time, and for good reason. Everyone involved in the deal wants to feel completely comfortable with the terms and know that everything checks out. This includes the buyer, the seller and, if the purchase is financed, the lender as well.
Once an offer is made and accepted, it is common (and for most lenders, in fact required) to order a home appraisal. The expertise is a sometimes long but very important step to ensure that the property is worth the agreed price. This guide will walk you through everything you need to know about the home appraisal schedule and process.
What is a property appraisal and why do I need one?
A property appraisal is a professional appraisal of a property that will determine the market value of the home. (This is different from a home inspection, which looks for potential problems that will require repairs.) The appraiser’s assessment is objective and looks at the overall condition of the home, as well as the value of the property. depending on the upgrades and improvements made. He or she also compares the home to similar homes in the area to help determine its final appraised value. This value helps the buyer and their mortgage lender know if they are paying a fair price for the property. A home appraisal typically costs around $350, according to HomeAdvisor.
“Lenders are required to obtain appraisals of real estate offered as collateral,” says Ken Dicks, chartered appraiser and manager of appraisal compliance at online appraisal management platform Reggora. In other words, to cover his investment, the lender must ensure that the house is worth at least the amount he is lending to finance it.
Contingencies impose conditions on the sale of a home, and an appraisal contingency is common in real estate transactions. This contingency means that if a home is valued at less than the agreed-upon sale price, the buyer can opt out of the sale. However, low valuations are not necessarily deal breakers – the buyer may also try to renegotiate the price, or even pay the difference.
How long does a home appraisal take?
A home appraisal usually takes place after a seller accepts your offer to buy their property, and the process can take several weeks from start to finish. “Depending on the request of assessors, assessments can take anywhere from one to three weeks,” says Dicks.
A number of other factors can play a role in determining how long this essential step takes in most real estate transactions. These include the physical location of the home – rural homes that are off the beaten path may take longer to get to than those more centrally located, for example.
Home appraisal timeline
The first step is to plan the evaluation itself. This is usually done by your mortgage lender, who contacts a third-party appraiser and requests that an appraisal be performed. In most cases, these professionals will schedule the assessment within 48 hours of the request.
At the scheduled time, a professional appraiser will visit the and visit the property being appraised. “Typically, the appraiser will take a tour of the property to gather key data about the property and the improvements,” says Dicks. The home visitation process itself usually only takes about an hour, according to Dicks.
Research and Report
Now we come to the part of the assessment that actually takes a lot of time. The appraiser is required to conduct extensive market research and review similar homes in the area to help determine the value of the property. These comparisons, or comps, help establish potential market value. With this information, Dicks says, the appraiser provides “a valuable professional opinion, using an appropriately applied methodology while adhering to a universally accepted standard.”
An assessment report can take between one and three weeks under normal conditions. The time required for preparation can be affected by the complexity of the report, as well as the size and value of the appraised property. But it can also be affected by the appraiser’s schedule and when your lending company ordered the appraisal. During busier seasons, an evaluation may take longer.
The final appraisal report is delivered to your mortgage lender. Ultimately, the appraisal amount is what the lender will consider to be the value of the home – so the sale price could be right on target, above the appraised value or below. below the appraised value. The lender will review the report, along with all the details of the loan granted for the property.
“Often, lenders will require additional information from the appraiser to ensure compliance with individual loan programs or to update information as conditions change during the loan process,” says Dicks.
This process may lead to stipulations being added to the loan that must be met before a final decision is made. This can cause delays in the closing process and may even push back the closing date.
From evaluation to closing
Once the appraisal is complete and the loan updated, if necessary, to reflect all pertinent information, the mortgage underwriter will evaluate it and determine whether to approve or deny the loan application. If approved, the home buying process continues and you can set an official closing date for your new home.