How Long Does It Take For an Appraisal to Come Back?

Just because your offer on a home has been accepted doesn’t mean that you’re in the clear. In fact, there are still several components left in the process -- one of them being the appraisal. The appraisal process can be intimidating and time-consuming since the stakes are so high. Here’s everything you need to know about what this process entails and how long it will take before you can close: 

What Is a Home Appraisal?

A home appraisal is the estimated value of a home based on an inspection of its condition and features compared to similar recently sold homes in the area. An appraisal protects both the buyer and the lender for paying more than the house is worth. A licensed, third-party appraiser conducts this process with no connection to any party involved in the transaction to ensure a fair market value. 

How Does an Appraisal Differ From an Inspection?

An appraisal and an inspection are two different closing processes that many people tend to conflate with one another. In reality, an appraisal determines the value of a home, wherein an inspection determines the condition. Of course, an appraisal considers the condition of a home but primarily focuses on surface-level factors. In contrast, an inspection goes deeper into the home to find any hidden problems. 

While both appraisals and inspections are generally recommended, usually only appraisals are required by lenders. 

Why Do You Need a Home Appraisal?

Even though you may not be concerned about a home appraisal, your lender definitely is! The list price would be based on the home’s actual value in an ideal world, but this isn’t always the case. As a result, most lenders require you to have an appraisal done of the house to ensure that they aren’t lending you more money than the house is worth.

If you aren’t financing your home and are instead paying cash, it’s still a good idea to order a home appraisal to ensure that you’re making a solid investment and achieving a positive return rate. 

What Does a Home Appraisal Cost?

An appraisal is a necessary component of the home buying process -- but how much will it cost you? The cost of a home appraisal may vary based on several different factors, including the size of the home, the type of home, the location of the home, and the condition of the home. 

As a result, the cost of a home appraisal typically ranges from $200 to $600, with the national average being around $335. This cost won’t make or break you financially, but it’s still helpful to have a rough estimate. 

What Happens During the Appraisal Process?

The appraisal process consists of three different parts:

1. When your offer is approved, and you sign a purchase agreement, your lender will order an appraisal for the property.
2. You then schedule a time for an appraiser to come and inspect the home. Appraisers usually have a detailed list of things that they must inspect. In addition, certain types of loans like FHA and VA loans have additional items that must be inspected during the appraisal process.
3. After the inspection is complete, the appraiser will then create a report to determine the home’s value. This report contains a detailed description of the property, its condition, and its unique features. This report will also contain information about the local real estate market, the location of the home, and the comparable properties used to determine its value.
4. Once the appraisal is complete, the terms of your loan will be finalized, and you are all set to close on your new home. 

What Do Appraisers Look for in a Home?

Appraisers take a thorough look at both the outside and inside of a home to calculate its value. 

Here are some of the things that appraisers will look at outside:

• Total land area of the property
• Neighborhood and overall location
• Age of the property
• Home’s structural integrity
• Type of garage
• Porch and patio amenities
• Quality of the landscaping
• Home’s overall curb appeal
• Condition of the roof and foundation
• Condition and type of driveway surface
• Condition of the chimney, if applicable
• Condition of the pool, if applicable

Here are some of the things that appraisers will look at inside: 

• Square footage of the home
• Functional layout of the home
• Structural integrity of the home
• Number and size of bedrooms and bathrooms
• Age and condition of the HVAC system, if applicable
• Type of basement or crawl space
• Included utilities
• Built-in appliance upgrades
• Energy-efficient features
• Evidence of termites or pests
• Quality of the electrical and plumbing systems
• Material and conditions of the walls, floors, and windows
• Code compliance
• Health and safety accouterments

How Long Does It Take to Get a House Appraised?

As you now know, the appraisal process involves a few different steps with vastly different timelines. For starters, your lender needs to order the appraisal and wait for an appraisal to respond. This typically happens within 48 hours. From there, you need to schedule a date and time for the appraiser to come and walk the property. Depending on your schedule and theirs, it may take some time to set an appointment that works for everyone. 

The physical inspection process may take anywhere from 15 minutes to several hours, depending on the size and condition of the property. After the physical inspection is complete, it usually takes a week or two for you to receive the appraisal report back from the appraiser. 

You should allot a few weeks for the entire appraisal process from start to finish. 

What Happens If the House Doesn’t Appraise?

If your house doesn’t appraise -- that is, the value is lower than your offer price -- don’t panic. There are things you can do to address the gap:

• For starters, you can choose to make up the difference in price on your own by making a higher down payment. This option is often necessary for competitive markets wherein negotiations with the seller and appraisal contingencies are often not considered.
• If you do not want to make up the difference in price on your own, you could ask the seller to meet you halfway or come to some other agreement. In some markets, sellers are willing to lower the purchase price to close the deal. In competitive markets, however, they will simply move on to someone willing to pay up.
• Finally, if you cannot pay the difference and the seller is unwilling to negotiate, you can back out of the deal so long as you have an appraisal contingency in your offer. This contingency allows you to back out without losing your earnest money deposit (EMD). 

Tips to Prepare Your Home for Appraisal

As a seller, there are things that you can do to prepare your home for appraisal to help ensure that it meets the purchase price.

• Clean: This step is so simple, but it can make a huge difference. If you don’t want to do all the dirty work yourself, you may want to hire a professional cleaning company to leave your home completely spotless.
• Curb appeal: Buyers aren’t the only ones that care about curb appeal -- appraisers do too. As a result, you may want to clean up your yard a bit by cutting the grass, trimming bushes, and removing leaves, mulch, branches, etc. You may also want to add charming and practical touches like doormats and lighting.
• Finish projects: We have all started a home project only to forget about it and leave it unfinished. Additionally, we have all noticed little annoyances or issues with our homes before putting them on the back burner. Before your appraisal, you should go through your home with a fine-tooth comb to address any unfinished projects and seemingly minor issues that could end up having a big impact on the inspection.
• Make upgrades: This doesn’t mean that you have to renovate your home before an appraisal. Instead, consider making cosmetic upgrades to boost your home’s value. Doing things like painting and replacing fixtures are quick and easy fixes that can make a big difference. 

Final Thoughts on Home Appraisals

With all this in mind, you’re ready to tackle the appraisal process and make it to the closing table. If you’re not quite that far on your home buying journey or have found yourself stuck at the financing stage, be sure to reach out to the lending experts at Vaster Capital for professional and personalized lending expertise. 

Sources:

1. Purchasing A Home What You Should Know About Home Appraisals | Investopedia
2. Appraisal vs Inspection: What's the Difference? | Realtor
3. How Long Does It Take to Get a House Appraised? | Homelight