You’ve found your dream home, and now it’s time to make it your own. One of the first things you’ll want to check off your final closing list is the home appraisal. So, what exactly is that?

The home appraisal is essentially a value assessment of the home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately. If you’re buying your home using a mortgage, your bank will require the home appraisal. This is different from a home inspection — an appraisal protects the financial interests of the lender, and while a home inspection protects the buyer from potential maintenance or repair issues.   

During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. Their assessment will factor in a variety of things, including the home’s floor plan, functionality, condition, location, school district, fixtures, lot size, and more. Adjustments will generally be made if the home was recently renovated, or exterior upgrades like a deck or pool were put in place. The appraiser will also compare the home to several similar homes in the area — known as comps — that sold within the last six months.

Unlike a home inspection, an appraisal only looks at the surface value of the property. The appraiser will note any obvious damage, such as a badly dilapidated roof, but won’t conduct the same thorough tests you’ll get from a home inspector. The final appraisal report must include a street map showing the property and the comps, photographs of the interior and exterior, an explanation on how the square footage was calculated, market sales data, public land records, and more.

After the appraisal report is complete, the lender uses the information to ensure that the property is worth the amount they are investing. This is a safeguard for the lender, as the home acts as collateral for the mortgage. If a buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed. 

As a buyer, the most important thing to note is that home appraisals protect the bank, not the homeowner. You’ll still need to schedule a home inspection to be sure that your home is in good condition and won’t require any unexpected repairs. 

Are you ready to close on your dream home? Give us a call! 

What is a Home Appraisal?
Tagged on: