Once your offer is accepted and negotiations are complete, your lender orders an independent appraisal to confirm the home's value matches your purchase price. This protects both you and the lender by ensuring the loan amount is appropriate for the property's actual worth.
What is a Home Appraisal?
A home appraisal is an objective, professional assessment done by a licensed appraiser to determine how much a home or property is worth. The appraiser provides an unbiased opinion of value that protects all parties in the transaction.
Protects the Lender
Ensures they don't loan more than the home is worth, reducing their risk if foreclosure becomes necessary.
Protects the Buyer
Confirms you're paying a fair market price and not overpaying for the property.
Establishes Market Value
Provides an independent assessment based on comparable sales and property condition.
How the Appraisal Process Works
Lender Orders Appraisal
After your offer is accepted and you've signed the purchase agreement, your lender orders the appraisal from a licensed, independent appraiser.
Appraiser Visits the Home
The appraiser conducts an in-person inspection, measuring the home, drawing floor plans, and making extensive notes about the property's condition and features.
Comparable Sales Analysis
The appraiser researches recent sales of similar properties in the area using MLS data, tax records, and local market information.
Report and Valuation
The appraiser delivers a comprehensive report with their professional opinion of value. You're entitled to a free copy of this report.
What Does the Appraiser Evaluate?
Location & Neighborhood
- Urban, suburban, or rural setting
- Proximity to schools, shopping, transportation
- Neighborhood growth trends
- School district quality
Physical Characteristics
- Square footage of home and lot
- Age and condition of structure
- Foundation, roof, and wall condition
- Layout and floor plan efficiency
Features & Amenities
- Fireplaces, decks, swimming pools
- Updated kitchens and bathrooms
- Appliance condition and age
- Energy efficiency features
Market Conditions
- Recent comparable sales
- Current market trends
- Property tax assessments
- Days on market for similar homes
Other Important Activities During This Time
While the appraisal is being completed, several other critical processes are happening simultaneously:
Property Title Search
This ensures that the seller truly owns the property, and that all existing liens, loans or judgments are disclosed. The title company researches public records to confirm clear ownership and identify any potential issues.
What's Checked:
- Ownership history and chain of title
- Outstanding mortgages or liens
- Unpaid taxes or assessments
- Easements or restrictions
- Legal judgments against the property
Homeowner's Insurance
You'll need insurance for the new home prior to closing. This will protect against things like fire, storms and flooding. Your lender requires proof of insurance before funding your loan.
Coverage Typically Includes:
- Dwelling coverage for the structure
- Personal property protection
- Liability coverage
- Additional living expenses
- Natural disaster protection (varies by location)
What If the Appraisal Comes in Low?
If the appraised value is lower than your agreed purchase price, you have several options:
Questions About the Appraisal Process?
We'll guide you through every step of the appraisal process and help you understand what to expect. If any issues arise, we're here to help you navigate your options.