Facebook
X
Pinterest
Copy Link
The Home Appraisal Process:
Whether you’re buying a home or are the owner of the home being appraised, the appraisal is one of the most important–and anxiety inducing-parts of the transaction. It is also one of the most misunderstood. A home appraisal helps ensure the property’s value supports the agreed upon purchase price, protecting both the Buyer and the lender. Knowing what you can expect can help reduce stress and help you prepare for various outcomes.
What is the home appraisal?
A home appraisal is a professional, unbiased opinion of a property’s market value. The appraisal is completed by a licensed appraiser and the report is then reviewed by other appraisers. After this, it is also reviewed by the underwriter. The result is NOT just one professional’s opinion, but that of several.
The lender typically orders the appraisal after receiving the signed purchase contract. The Buyer pays for the appraisal. The lender handles ordering the appraisal at the right time. The appraisal benefits the lender by confirming that the value of the home is inline with what the lender has agreed to finance. The lender can choose to waive the value portion of the appraisal depending on the Buyer’s credit worthiness, amount being put down, and helpful recent sales in the neighborhood.
Appraisers evaluate recent comparable sales, the home’s size, layout, location, updates, age of mechanicals, and overall condition. They also consider current market trends and various neighborhood factors.
What happens during the appraisal?
The appraiser will schedule to visit the property through the listing agent’s scheduling platform. The visit usually lasts 30-60 minutes. The appraiser will:
-measure the home to confirm sq. footage
-take photographs of the interior and exterior
-note upgrades, renovations, and finishes
-assess the home’s overall condition and functionality
After the visit, the appraiser researches comparable recent sales and prepares a written report which is sent to the lender. This review process usually takes several days and up to a week.
The role of home condition
While appraisals are not inspections, home condition matters more than many sellers realize. Appraisers look for safety issues, deferred maintenance, and overall livability. Items like peeling paint, roof damage, broken windows, non-functioning systems, and safety hazards can negatively affect the appraised value and potentially delay loan approval until corrected.
Cleanliness does not directly increase value, but a well maintained home signals care and upkeep. Addressing obvious repairs ahead of time can help prevent issues that may trigger lender concerns and repair requirements.
What if the appraisal comes in low?
When the appraised value is lower than the purchase price, this creates an appraisal gap. Since lenders base loans on the lower of the purchase price or the appraised value, a gap can complicate the transaction.
If an appraisal gap occurs, Buyers and Sellers have a few options:
-Renegotiate purchase price
-Split the difference
-Buyer pays the gap in cash
-Seller challenges the appraisal (rare for the findings to change, but possible)
Some Buyers preemptively include an appraisal gap coverage clause in their purchase contract.
What is a lender Value Waiver?
In some cases, the Buyers may receive a lender value waiver. This happens when the lender’s automated systems determine there is enough market data to confidently estimate the home’s value without a full appraisal.
Value waivers are more common with:
-Strong Buyer credit and financial profiles
-Lower loan-to-value ratios (more money down)
-Conventional loans
-Homes in busy markets
Not every transaction qualifies and the final decision rests with the lender-not the Buyer or their agent. This also doesn’t take away the option for the appraiser to visit the home to assess condition.
Working with an experienced agent like me will ensure you’re prepared, informed, and positioned to navigate appraisal outcomes smoothly-whatever the market brings.
