There are many steps in the home buying process between the offer being accepted and the property transferring hands at the closing. The home appraisal is an important step in the process, especially when a buyer is trying to secure a mortgage. Understanding the appraisal process can help both buyers and sellers navigate through a home sale smoothly.

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What is an Appraisal?

A home appraisal is an unbiased professional opinion of the value of a home. Rather than a list price or a purchase price, which are agreed upon between the buyer and seller, an appraisal is what the bank will look at as the true money value of the home during the mortgage process. When the appraisal is complete, it will determine whether or not the price of the home on the contract is appropriate given those home’s condition, location, features, and current market conditions. The appraisal usually takes seven to ten days to complete, which includes a visit from the appraiser of about an hour or two. Appraisals usually cost $300-450 and the buyer is responsible for covering this cost.

How is the Value Determined During an Appraisal?

Because the appraisal is primarily protecting the lender’s interests, the lender will usually order the appraisal. The appraiser must be impartial, licensed and certified, and have no direct or indirect interest in the transaction. The value is determined by several factors including:

  • The recent sale of similar local properties.
  • Current market trends.
  • The home’s amenities.
  • The number of bedrooms and bathrooms.
  • The square footage of the home.
  • The size of the property.
  • The floor plan’s functionality.
  • Any needed repairs that will adversely affect the property’s value.

What Will an Appraisal Report Include?

Most appraisers who are appraising single family homes will use the Uniform Residential Appraisal Report from Fannie Mae. This report has the appraiser describe the interior and exterior of the property, describe the neighborhood, and identify nearby comparable sales. The appraiser will use all the data to provide a report and conclude the property value based on these factors. The report will include:

  • A map showing the property and nearby comparable sales.
  • An exterior sketch.
  • An explanation of the square footage calculation.
  • Photographs of the front, back, and street scene for both the appraised property and comparable properties marked in the report.
  • Other pertinent information such as market sale data, public land records, and public tax records.

When Does an Appraisal Matter in the Home Buying Process?

An appraisal will mean different things to the buyer and the seller.


  • Buyer


If you are the buyer, and the appraisal comes in at or above the agreed upon purchase price, the transaction will go forward as planned. However, if the appraisal comes in lower than the contract price, it can have a big impact. A lender will typically not want to lend more money than the home is worth. You can use the appraisal to have the seller lower the price to the appraised amount, or in some cases, you can agree to pay the difference in cash so the lender will only be providing a mortgage for the appraised amount.


  • Seller


If your home appraised lower than you were expecting and you are faced with having to lower your price or allowing the sale to fall through, you can request a second opinion or a re-evaluation.

If the home was priced fairly and is in good condition, the home appraisal is just another step towards closing on your new house. Using an experienced agent can help you through the home buying process. They have likely been through many appraisals with previous clients, and they know what to expect and how to navigate negotiations if the appraisal comes back too low. Buying a house is an exciting time, and a trusted agent can help guide you through all of the unknowns. We can help you find your dream home, contact Amberwood Real Estate today.