Here are some key things you need to know about appraisals and how the appraisal process works.
The cost of an appraisal in our area is typically $500 to $600 and is usually paid for by the homebuyer at loan inception after the purchase contract has been executed. Appraisal fees vary depending on the location of the property and the complexity of the appraisal process. The cost is also driven somewhat by market demand, as with any other service.
Appraisers are selected by the mortgage lenders, and those lenders are bound to strict regulation when making their selection. Most lenders will use an appraisal management company to order and coordinate their appraisals. You may want to ask your specific lender how they select an appraiser.
Appraisers are not immune to the fact that the buyer and seller are counting on the home to appraise at the agreed-upon value. However, they can’t base an appraisal on the sales price. They have to use the most recent sold comparisons within the closest range of the home. Their work is then submitted to the bank’s underwriters who also review that data and must give a final approval of the appraisal.
Low appraisals can and do happen. If this happens, you can renegotiate or get a second opinion in some cases, which is called a value appeal.
To save on the cost of a home appraisal, when you’re selecting a mortgage lender, ask them what the cost will be for the appraisal so you know before you apply. Compare with other lenders and confirm you’re receiving the market rate for the appraisal.
If you have any questions about appraisals or any other real estate topic, please don’t hesitate to call or email me today. I would be happy to be of service to you.