Understanding the Home Appraisal Process: How Long Does It Take?

When embarking on the journey of purchasing or selling a home, it’s essential to understand the role a home appraisal plays in the transaction. An appraisal is a crucial part of the home buying or selling process that can significantly influence your financial decisions. The question that often comes up is, “How long does an appraisal take?” This article delves into the intricacies of a home appraisal, simplifying the process, highlighting the timeline, and shedding light on the factors that influence the duration.

What Is a Home Appraisal?

A home appraisal is a comprehensive evaluation conducted by a licensed third-party appraiser to ascertain the value of a property. Despite the buyer and the seller agreeing on a price, an objective appraisal is required, predominantly by the mortgage lender, to determine how much they are willing to loan. Sellers may also opt for an appraisal before listing their house to set a realistic price.

The buyer usually bears the cost of an appraisal required by the lender, which averages between $313 and $420. However, in certain circumstances, especially for homes in rural locations, this cost can escalate up to $500 or even $900. The lender is responsible for hiring an appraiser and will receive the appraisal report.

The Home Appraisal Process

The home appraisal process consists of three core elements: physical inspection of the property, selection of comparable sales, and data evaluation.

Physical Inspection

The appraiser will begin by examining the actual property, noting its physical attributes, quality, size, amenities, and additional features. The condition of the home, classified as average, good, fair, or poor, will influence its value.

Selecting Comparable Sales

To derive a reasonable cost for the home, the appraiser will use ‘comps’ or comparable sales. They will examine recent sales of similar properties, ideally sold within the last year. A ‘comparable’ house is determined by several factors including recentness of the sale, proximity to the subject property, square footage and lot size, the similarity of home style, age, and condition.

Data Evaluation

The appraisal report takes into account as many nuances and subtleties as possible. For instance, there may be some regression analytics involved in calculating exactly how much that house is worth if, for instance, all the recently sold homes have four bedrooms and your house has three. The appraiser isn’t just going to simply double the square footage of a comp that’s half the size of your house. And if an appraiser can’t find any similar homes priced as high, that could be a sign that the one you’re eyeing is overpriced.

Duration: How Long Does an Appraisal Take?

An appraisal’s duration can vary dramatically, depending on the size of the home and the current housing market. In general, an appraisal can take anywhere from a few days to a few weeks. However, under typical circumstances, the appraisal report should be ready one to two weeks after it’s ordered.

Delays in the Appraisal Process

Certain circumstances may prolong the appraisal process. High-end or specialty properties may require more time to evaluate due to the need for a suitably qualified appraiser. A surge in demand for home appraisals due to low mortgage rates could also lead to delays. Similarly, a labor shortage in the appraisal industry could slow things down. The process can also take longer for an FHA or VA loan, which are government-backed loans requiring more stringent criteria.

Reading the Appraisal Report

Understanding the appraisal report is crucial as it can affect your mortgage and whether or not you can finalize the sale. If the appraised value is about the same as your offer, you can proceed with closing on your dream home. However, if the appraisal is lower than your offer, it could provide an opportunity for you to renegotiate the sales price with the seller, or you may have to make up the difference in cost.

The Impact of a Low Appraisal

A low appraisal implies that the appraised value is lower than the agreed-upon purchase price. This can be problematic as it can affect how much your lender will loan you and could even jeopardize your closing. If the appraisal is lower than the purchase price, you may be unable to finalize the property due to lack of funds.

The Impact of a High Appraisal

A high appraisal, on the other hand, is always good news for the buyer. It signifies that you’ve managed to negotiate a purchase price that’s less than the home’s actual market value, leaving your mortgage unaffected, and you can proceed with the sale.

Preparing for an Appraisal

There are several steps homeowners can take to prepare for an appraisal. Researching the current housing market, gathering information about the home, making minor improvements, and sprucing up the home’s curb appeal can all contribute to a smoother and more accurate appraisal.

Final Thoughts

Home appraisals are a critical part of the home buying or selling process. They provide valuable insights into the property’s worth, allowing buyers and sellers to make informed financial decisions. The appraisal process can take a few days to several weeks, depending on various factors. However, understanding the process and timeline can help you navigate this important step with ease.

Buying a home soon? Our team of real estate consultants can help you thru every step of the buying process including the home appraisal process. If you are a seller we will help you prepare for the home appraisal to show your home in the best light.