What Happens During a Home Appraisal? Guide For Home Buyers
What happens during a home appraisal when you're buying a house? A licensed expert determines the home’s market value.
After finding the home of your dreams, you know you’ll have to jump through some hoops before you’re a homeowner. One of those hoops is the appraisal, which can cause anxiety for both the seller and the buyer.
The seller is hoping the appraisal is comparable to the agreed-upon sale price (If it is much higher, then this would mean they may have lost out on money; If it is too low, there is a possibility they might have to lower the price to keep the buyer). The buyer is hoping for an appraisal greater than or equal to sale price (If it appraises higher, then they’re getting an excellent deal, but if it appraises too low, they may not get approved for their loan).
What happens during a home appraisal, and what do you need to know? Who is this person deciding how much a home is worth, and what is the fallout if their assessment is different than what was expected? Read on to understand the process in detail!
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What is an appraisal?
The buyer and seller have entered into a contract, earnest money has been put down, the home has passed inspection (another point of anxiety!) and now it is time for the appraisal. A licensed expert (an appraiser) will determine how much the house you want to buy is worth in the current market.
Appraisals are often required for the buyer to secure a loan. This is because the lender wants to know that the loan collateral (the house) is worth at least the amount they are lending you. For cash buyers, however, the appraisal is optional (and how the information from the appraisal is used depends on the contract).
When the appraisal is complete, the appraiser delivers the findings in a detailed report that shows how the value of the home was calculated and the role played by each of the factors considered.
