Home Appraisal: What You Need to Know

Finding the perfect home is just the beginning! Once you've secured the house of your dreams, it's time to navigate the process of financing your purchase. Most homebuyers, whether seasoned or first-time, utilize a mortgage to fund their purchase. This loan agreement involves working with a mortgage company like HMG. However, before a lender will committing to the loan, the lender wants to ensure the property's value aligns with the agreed-upon purchase price. This is where the home appraisal comes in.

What is a Home Appraisal?

A home appraisal is an independent evaluation conducted by a third party to determine the market value of a property at the time of purchase or refinance. This unbiased assessment considers the home's condition, features, and comparable properties in the market.

Cost and Responsibility

Home appraisals typically range between $300 and $600, depending on factors like property size, type (single-family vs. multi-family), and the necessity of a land survey for extensive properties. The buyer usually shoulders the cost, but if you choose to work with HMG we refund the appraisal fee at closing. It's simply a way you show us your committed to following through on the mortgage loan and our way of saving you money at closing.

Ensuring Impartiality

A crucial aspect of a home appraisal is its independence and unbiased nature. Appraisers operate distinctly from the buyer, real estate agent, and lender. While HMG can recommend reputable appraisers, these individuals maintain impartiality throughout the process.

Factors Affecting Appraisal Value

The appraiser considers various factors, both intrinsic to the property and external market conditions, when determining value. Here are some key considerations:

• Home Condition: The appraiser conducts a physical inspection, focusing on the number of bedrooms and bathrooms, adherence to building codes (e.g., required closet space and emergency exits), the presence of safety hazards, and overall livability. Additionally, they assess for specific hazards, like lead paint, not typically covered by a home inspection.
• Special Features: High-end finishes like granite countertops or expensive hardwood floors, and permanent upgrades like pools or in-law suites, can positively impact the appraised value.
• Comparable Homes: This factor, often beyond your control, significantly influences your home's value. If similar houses in the vicinity sold for less than your purchase price, it could potentially lower your home's valuation. Conversely, if similar homes are experiencing rising prices, it might work in your favor. The appraiser identifies comparable properties based on size, number of bedrooms/bathrooms, and upgrades, and factors them into the final valuation.

Appealing the Appraisal

If you disagree with the appraised value, you can appeal the decision. However, you'll need to provide solid evidence, typically in the form of comparable properties that support your claim.

A home appraisal not only validates the value of the property for the lender but gives you peace of mind as the buyer that the home in which you are getting ready to purchase is worth what you are paying for it.