What is the Appraisal Process Like?
During the home-buying process, obtaining a home appraisal is a critical step. Let’s take a look at some of the frequently asked questions.
A home appraisal is an unbiased estimate of the true (or fair market) value of what a home is worth. The process is usually 7-10 days. All lenders order an appraisal during the mortgage loan process so that there is an objective way to assess the home’s market value and ensure that the amount of money requested by the borrower is appropriate. The appraisal can include recent sales information for similar properties, the current condition of the property, and the location of the property, i.e., insight as to how the neighborhood impacts the property’s value.
Appraisals are conducted by highly-trained professionals who are licensed and/or certified to determine the value of a home fairly, objectively, and without bias in the state where the property is located.
While no appraiser is infallible, his or her opinion of the value of your home is informed by rigorous training, numerous tests, several years of on-the-job experience, and required continuing education. They are also required to substantiate every finding in their reports that could influence a home’s value. Appraisers and their employers (often appraisal management companies) are heavily regulated. The consequences of issuing deliberately misleading or biased reports can be severe, so appraisers work hard to remain impartial and keep personal value judgments and prejudices out of their work.
Remember this: appraisers are looking at the condition of what’s permanently part of or attached to the house. They’re not evaluating the décor or furniture or anything that’s not affixed to the property; what’s most important are your home’s physical characteristics (age, square footage, the number of bedrooms and baths, lot size, location, view) as well as their observable condition.
Once you’ve read the appraisal report and reviewed the appraiser’s supporting documents, you can challenge it if you think it is inaccurate or doesn’t take into consideration new or important data about the property or comparable homes. Most lenders review appraisals through a strict system of checks and balances that compares the appraisal report to other appraisals on all known sales in your neighborhood. This internal review system can catch discrepancies that should be investigated, but any information you can provide to your lender will help.