Introduction to home appraisals

What is a home appraisal?

In today's world, where getting ahead can be tough, a home appraisal helps people make smart choices about buying or selling a house. A real estate property appraisal, commonly called a home appraisal, is a professional opinion of a home's value used for buying, selling, or refinancing a home.

Appraisers look at recent sales of similar homes, check the house's condition, and study market trends to give a clear report on the home's value. This helps homeowners and buyers make informed decisions, and it gives lenders information they need to approve a mortgage.

When are home appraisals used?

Appraisals are a key part of buying and selling a home, and their purpose depends on who requests them. We worked with The Appraisal Foundation to help you understand the appraisal process better. Here's how home appraisals are used when buying, selling, or refinancing a home:

• Homeowners: Homeowners might get an appraisal to better understand the market value of their home and help them decide on a listing price. Learn how to prepare for your home to be appraised.
• Home buyers: For buyers, getting an appraisal may help them see if the price they want to pay matches the home's market value. However, the final price is something that the buyer and seller decide together.
• Lenders: When a home buyer applies for a mortgage or refinancing, lenders use appraisals to assess the property's market value and determine the amount they are willing to lend the buyer.

How much does a home appraisal cost?

According to Home Advisor, an appraisal for a single-family home typically costs from $300 to $500. A multi-family home will cost more to appraise, averaging $600 to $1,500. The cost of a home appraisal ultimately depends on the home's features, location, market conditions, turnaround time, and the type of loan.

Who pays for a home appraisal?

The home buyer seeking a loan typically pays for the appraisal. If a homeowner wants to know their home's value when selling, they pay for the appraisal.

How long does a home appraisal take?

After the appraiser finishes the inspection, it usually takes a few days for them to review their notes on the property, compare nearby homes, and write the appraisal report.

What is considered in a home appraisal?

The appraiser's report can tell you important details about a property and its surrounding area, including:

• Size, layout, and floor plan: Appraisers measure a house to figure out its exact size and create a detailed floor plan. They measure basements, detached garages, and other structures on the property separately from the main house. Finished and heated portions of a basement can count as livable space, but they're considered below ground level.
• Number of bedrooms and bathrooms: Sellers and realtors might call a room a bedroom based on how it looks or how it's used. However, appraisers follow local building codes and industry standards to determine if a room can be officially called a bedroom. They look at factors like minimum size, ceiling height, and whether the room has a window or door for an exit. Some areas may also require features like a closet or fire alarm.
• Updates and unique features: Appraisers look for recent renovations and upgrades that could make a home more attractive to buyers. Things like granite or quartz kitchen countertops and walk-in showers often add value. In areas with nice weather, outdoor living spaces like decks and patios can boost a home's value.
• Recent sales of similar homes in the area: Appraisers look at homes of similar likeness that have recently sold, often called "comps" or comparable properties, as part of the home appraisal process.
• Housing market: The number of houses for sale, how many people want to buy them, and final selling prices all factor into how appraisers determine a home's value.

Knowing how the appraisal process works and what goes into determining a home's appraised value can help you make smarter decisions when buying, selling, or refinancing.

Got questions? Get the help and answers you need at any step of your appraisal journey with our Home Appraisal Advisor.