Whether you’re a first time home buyer or relocating to a new home, home appraisals are one of the most critical qualifying factors for a mortgage. Lenders require a home appraisal because they want to protect their investment. So what are home appraisals and how do they work? Read on to learn about their part in the home buying process.
Home Appraisals Explained
What is a home appraisal?
The purpose of a home appraisal is to determine your home’s value. If your home was on the market for $400,000 but the value was only determined to be $350,000, as a home buyer you’d want to know. During the appraisal, a professional appraiser comes to your home, completes an evaluation and then gives you an estimate on its market value.
How much does an appraisal cost?
Similar to home inspections, home appraisals require a professional to come out to your home, spend a few hours evaluating and providing a report at the end. On average a home appraisal costs a few hundred dollars, but depends on your home’s location, size, finishes, neighborhood, and other factors. For example, if you have a large home located right on the water, your appraisal would cost far more than a small condo in the city. A lot of lenders have preferred appraisers, so when you talk with your lender make sure to ask which company completes the appraisals.
How can I improve my home’s appraisal value?
If you are a home seller, here are a couple ways to improve your home’s appraisal value:
- Clean up clutter, in every room. By creating space in your home, it appears larger and well kept to the appraiser. Go through each room, even the garage and closets, and organize your belongings.
- Touch up. If the front of your home needs a touch up paint job, its best to do so before the appraiser comes. Additionally, if your yard needs a touch up – i.e. lawn mowed, leaves picked up, hedges trimmed – it can really improve your home’s first impression.
- Stage your home. Even if you don’t have the trendiest furniture, make your home look well put together and organized. It’s best to stage your property to look like a model home so potential home buyers can picture their life in the home.
What do appraisers look at during the home appraisal?
Appraisers look at just about everything you can imagine inside the home as well as find comparable homes in the area to determine market value. Inside the home, they look at number of bedrooms, bathrooms, the property’s overall condition, cosmetic damage, plumbing, and electrical issues. And by looking at homes in the neighborhood, the appraiser is able to determine a fair market value for your home. So it’s best if you are selling at a time when your neighbors have sold their homes for over asking price.
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