What is home appraisal? Is it necessary in buying home process? Home appraisal is one of the steps that you need to pass before you finally purchase a home. A home appraisal will determine the agreement of how much you have to pay for home through the loan and mortgage. When you have searched a home listing, you should continue the next process like a home appraisal.
Now we’ll discuss home appraisal from definition to types and from how it works to how much it costs.
Home Appraisal Definition
Home appraisal is defined as a process that a home buyer should pass to get the exact value of your future home. Home appraisal is determined by a real estate appraiser. The home appraisal tells you and the lender about the final price you’ll both agree to pay. Home appraisal will also include property taxes which are ones of the requirements in most countries.
However, some other countries don’t necessarily ask for home appraisals in the requirements, this means that you can skip if you are buying the home with cash. However, it becomes very necessary when you have only a tight budget and need a loan or mortgage.
Home Appraisal Types
There are three common types of home appraisal that an appraisal process to help you determine the final value of a home. They are hybrid appraisal and desktop appraisal.
Hybrid appraisal involves both virtual and in-person visit to inspect and examine the property. Generally, the appraisal uses a photograph to evaluate the property. They usually have partners to collect information about the home measurements and other specific features.
Desktop appraisal is simply done from the appraiser’s desktop. This type of home appraisal will use only the house floor plans, public records, real estate company to gain the information they need. This way, the appraiser doesn’t need to visit the home for inspection. One of the benefits here is that the appraisal needs short time and the process finishes quickly.
The third type of home appraisal is drive-by appraisal. This is usually used to qualify the borrowers. FHA and VA lenders usually require this appraisal to determine the eligibility of the borrowers. During the COVID-19 pandemic years, this drive-by appraisal is required to have a home approved.
How A Home Appraisal Works
A home appraisal involves inspection and assessment in working its process. There are several things that home appraisal does to carry out its tasks. First, it examines the living condition of the home.
This way, the appraiser won’t try to identify the home issues but it would rather assess the home general condition like the number of bedrooms, the home system functionalities, safety hazard presence and etc.
Second, home appraisal evaluates the home improvements and renovations on the home. This is to consider the increase of home value. If you don’t include this appraisal, the appraisal won’t either include the improvement and renovation costs in his evaluation.
The third task hat a home appraiser do is examining the nearby home values. Generally, a licensed appraiser will include this task to ensure and provide the best analysis about the similar properties nearby.
Once these tasks are done, the appraiser will create a property final evaluation in term of a formal report. This report will immediately be sent to the mortgage lender. Later, the mortgage lender will determine how much you should pay at last.
How Much A Home Appraisal Costs
A home appraisal price ranges from $600 to $2,000. Note, you’ll have a less expensive price if you buy the home for a single-family type. In return, you’ll pay highly if you buy a home for multifamily. The price for the appraisal is separated from the home price.
In this way, how much the appraiser requires you to pay is much depending on some factors like the home size, home’s location, and the amount of home research that the appraiser before finally making a final value report.
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Home buyers can pay higher fee for the home appraisal if they live in rural areas. This simply because there are only a few numbers of appraisers available there. However, you had better consult with your mortgage lender about how much to pay for the appraisal.
Overall, home appraisal is not really complicated. The final decision is on the buyer’s hand. All you need to do is to make sure that you follow the process well. This appraisal is aimed to protect you and your mortgage lender from home-overpayment. Home appraisal lets you learn all about how much every detail of the property. However, the appraisal does charge you for the service and so does the appraiser.
In shirt, you have anything to pay. The home, the inspection, appraisal, the appraiser, the lender and the other third parties that contribute to the way you are buying a home through loans.
