You can order dinner online, bank online, and even find a partner online — but you can't get a home appraised online. Banks and other lending companies almost always require an official home appraisal before agreeing to offer a mortgage for any property. This work is done in person by an independent agent. If the appraiser does not agree that the home is worth the listed price, financing will likely be impacted.
These professionals are licensed by the state. They aren't working for home sellers, even if you are the one who hired them. Usually, it is the buyer who pays for the home appraiser. Regardless, a home appraiser is the one responsible for determining the value of the home.
But what does an appraiser do? The process requires a lot of research and hands-on analysis. Here are 10 things home appraisers check off their to-do lists:
1. Gather Preliminary Data
The first thing an appraiser must do is gather all the basic data about your home. Before they can determine the value of a home, they need to know the number of rooms, the size of the rooms, the size of the property on which the home sits, and more. Before anybody gets out the measuring tape, the home appraiser will review the property information listed publicly online and in other databases.
It's also necessary to review information about sales in the surrounding area. This data is available on the multiple listing services that real estate agents also use.
2. Plan a Visit to the Home
When a home appraiser plans to visit your house, you’ll want to be on hand to take notes. You don't want to have any surprises when the appraisal is complete. Schedule the visit when you or your agent is available. There’s a good chance that the home appraiser will take pictures of the home during the inspection, so be prepared.
Ensure your appraisal preparation by following this home appraisal checklist.
3. Check Inside
A home appraiser wants to know the condition and design of the home so that it can be compared against recent home sales in the surrounding communities. This means that you should expect every light switch and bathroom faucet to be tested, along with the rest of the house's appliances and features.
4. Analyze the Home's Layout
A home appraiser will have in-depth knowledge of the market. If certain layouts have proven less attractive to buyers due to functional issues, that may impact the amount the home is worth. For example, some homes may allow access to some rooms only from other rooms. That might not be a problem for you, but it could be for a potential buyer. Conversely, recent upgrades to the home could make it more attractive than comparable properties.
5. Lookup All Appropriate Laws and Permits
Any addition, such as an extra bedroom, porch, or garage, will have to be checked. Make sure your contractor has pulled up all the relevant permits. If there is a building code violation, this will impact the value of the home until the situation is legally rectified. At the same time, home appraisers will also be aware of zoning opportunities that may allow for alternative uses to the property that could make it much more valuable than you may realize.
6. Walk Around the Lot
Of course, the home value is not just what’s inside the house. The home appraiser will always review the structural integrity and the quality of construction from the outside as well. They will walk around the outside of the home, taking notes on the state of the gutters, if any, and exterior. If the lot offers plenty of space for parking, for example, that's something the appraiser will take into consideration as well.
7. Take a Drive
A good home appraiser will also be very observant when approaching or leaving a home. What are the surrounding homes and buildings like? Are there businesses that make undesirable neighbors? Everything that exists near a home has the potential to positively or negatively impact that home’s value.
For example, a nearby airport, power lines that potentially present a safety hazard, or the location of the nearest fire hydrant can all be factors to consider.
8. Consider Unique Features
The home appraisal process may seem intimidating to some homeowners, but those who have kept up with regular maintenance and cared for their property will be rewarded. If your home or lot is special, particularly when compared to an adjacent property, home appraisers will look at the unique features to adjust the home value.
9. Submit a Report
It can take around three days for a home appraiser to compile the information received from research and the home visit to determine the home value. This document is usually only delivered to the lender and the buyer. Sellers are able to receive a copy of the report if the price determined through the appraisal process is less than the agreed-upon or listed price.
10. Advise on Alternative Purchase Programs
While traditional real estate transactions start with a listed asking price, followed by negotiations and approval from the bank, alternative funding programs just use the expertise of the home appraiser. This saves time and leaves out everyone in the middle.
For example, Ribbon's MoveAbility program and Sell & Stay program both rely on the home value as determined by the home appraiser. These programs allow flexibility for homeowners who need to move out and get a fair price quickly.
Home Appraisers Offer In-Depth Analysis
A home appraiser is trained and licensed to do a more thorough job than is possible from an online system alone. Often, these professionals will create a career around developing an in-depth, local level of real estate knowledge.
This is used, along with the analysis of an in-person visit and the behind-the-scenes research, to determine a fair home value. Their work's primary purpose is to reassure the lender and the buyer that the home is worth the purchase price.
Key Takeaways
The appraisal is a crucial part of the home sale process, so it's important to know what to expect and how to prepare for it. Talk to a real estate expert to learn more and to put your home in the best light before the appraisal.
