Buying a home involves various stages of waiting, from pre-approval to the home inspection and underwriting. Another crucial step is the appraisal process, where appraisers determine the fair value of the property. The good news is that getting the results of a real estate appraisal may be quicker than you expect.

Within this comprehensive guide, we’ll delve into the intricate facets of home appraisals, shedding light on the precise methodologies appraisers employ to formulate their assessments. Furthermore, gaining profound insights into appraisals can empower you as a seller, potentially increase the value of your home.

Curious about how long an appraisal takes and what the process entails? Let’s explore these topics below.

What is the Home Appraisal Process?

Let’s walk through how the home appraisal process works, step by step.  

What is an Appraisal?

An appraisal determines the fair market value of a home and a professional, licensed third-party appraiser completes the assessment. A homeowner or prospective buyer can get a general home appraisal to help determine a price for the home or for tax assessment purposes. 

A home appraisal affects how much a bank will loan a buyer for their mortgage. You cannot choose your appraiser when you get a mortgage — your lender will use an appraisal management company (AMC) to order an appraisal. 

It’s a common misconception that local lenders have a different level of access to appraisers, but this isn’t true. 

Also note that an appraisal differs from an inspection. An appraisal determines a home’s value, while an inspection determines its condition. A home inspection offers more color on the condition of portions of the home — including major home systems, the roof and foundation.

What Does an Appraiser Do?

All Appraisers are licensed in their particular state. An appraiser usually does an on-site inspection to evaluate the current value of a property. Most of the time, appraisers complete on-site inspections. During on-site inspections, they evaluate the current real estate market, consider similar properties in the neighborhood and write up a report. The appraisal report specifies what the bank can loan for someone to purchase that particular property and why. 

Site Inspection Scheduling

The lender designates an AMC to manage scheduling, and it’s the AMC’s responsibility to request the appraisal on the lender’s behalf. Occasionally, the lender may directly commission the appraisal from an appraiser.

Appraisal Walkthrough 

In an on-site appraisal, the most common type of appraisal, the appraiser physically visits the property to conduct a visual inspection. They may walk through each room of a home to assess the size and condition, evaluate the exterior, record the layout and acreage of the property and take note of the square footage and number of rooms. 

The appraiser may also take any renovations into consideration, such as the addition of a new kitchen.

Comparison with Other Properties

Real estate appraisers use comparable sales to compare the home to recently sold properties in the area that have similar characteristics (such as size and amenities). Similar homes, or a list of recent comparable home sales, help appraisers find the fair market value of a home. 

Preparing the Report

At the conclusion of an appraisal, the appraiser prepares an appraisal report. The Uniform Standards of Professional Appraisal Practice says that appraisal reports can come in three written formats: self-contained, summary and restricted use.

  • Self-contained appraisal report: A self-contained appraisal report offers comprehensive coverage of information contained within the report with few references to files outside the report. 
  • Summary appraisal report: A summary appraisal report summarizes the data and analyses used in the assignment. 
  • Restricted-use appraisal report: The appraisal file for a summary or restricted-use appraisal report contains backup data and/or analyses that would be presented in a self-contained appraisal report for a client who is the sole user of the report. 

In addition, note that Fannie Mae and Freddie Mac, which are government-sponsored enterprises (GSEs), set exact standards for home appraisals. Fannie Mae and Freddie Mac do not directly offer mortgage loans. They buy mortgages from banks, credit unions and other financial institutions so these financial institutions can lend more money to homeowners. 

The uniform appraisal dataset (UAD), a standardized industry dataset for appraisal information through the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac, provides consistent data standards for the loans the GSEs purchase. It ensures accuracy of both the appraisal and an assessment of the marketability of the property. 

Fannie Mae and Freddie Mac standardize data to define the property, which helps lenders understand specific property characteristics, verify property eligibility and determine overall collateral risk.

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Ready to move forward?

How Long Does an Appraisal Take?

The duration of an appraisal process usually ranges from a few days to a week. However, several factors can influence the timeline. In a high-demand market, a busy appraiser’s schedule might extend the timeframe. Additionally, properties with intricate features or situated in specific regions, like rural areas, may require more time for assessment.

How to Prepare for a Home Appraisal: For Sellers

Wondering how to get ready for a home appraisal? Take a look at several things you can do to get ready: 

  • Gather documents for the home appraiser. Collect information about property size and proof of any home improvements, complete with receipts.
  • Clean up and declutter. Fix small things, such as repairing dented drywall or  replace a broken section of banister on the stairwell. 
  • Focus on the exterior. Pay attention to curb appeal. Landscaping, raking sticks, clearing weeds from your yard and cleaning the gutters can make a difference.
  • Update amenities. Look critically at major appliances, detailed finishes and other amenities before the appraisal and make any upgrades that you think can help add to your home value.

Any maintenance, finishing and repairs could potentially help the selling price of a home, though you don’t always have control over certain factors, such as the particular market conditions when you buy. 

Frequently Asked Questions About Home Appraisals

Can home appraisals be done virtually?

Yes. Homeowners can showcase their home online while an appraiser does a drive-by appraisal — an analysis of the exterior of the property. Drive-by appraisals, also called exterior appraisals, also rely on recent MLS listings. The MLS is a database that shows properties for sale among cooperating real estate brokers. 

In addition, desktop appraisals are also here to stay. Desktop appraisals involve property valuation completed at the appraiser’s desk using tax records and information listed on the multiple listing service (MLS) only.

Who pays for the home appraisal?

Buyers typically pay for appraisals. When and how much of the appraisal fee buyers must pay can vary depending on the mortgage lender. Most of the time, the home appraisal cost is paid when the home appraisal is conducted — prior to closing.

Need a knowledgeable partner on your side when navigating mortgage rates, determining the best purchase price on your dream home and more? Let Morty guide you through the exact process.

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