Top Appraisal Questions Answered

An appraisal is an evaluation of the value of a home based on other homes that have recently sold in the area.

How is the value determined?

An appraiser will visit the property, measure, and take photos of the interior and outside. The property is then compared to others that have sold in the area recently. Adjustments are made for differences such as view and size to determine the final value.

My house / condo has upgrades, isn’t it worth more?

Maybe.  If upgrades are common for the area, then they may not increase the value.  Or  if the upgrades are an over-improvement (like a $100k kitchen or a waterfall in the living room).  Appraisers follow a standardized range for adjustments.

What if my appraisal is low?

Most purchase contracts will have an appraisal contingency giving you options. If you are getting a mortgage, the lender will use the lower of the appraisal or sales price.

Let’s say you are buying a $200,000 home with 5% down it is appraised at $190,000. The mortgage will be based on $190,000 with 5% down.  The buyer has three choices:

  1. Pay the difference
  2. Re-negotiate to a lower sales price
  3. Cancel the contract (consult with your realtor about getting your escrow back)

What if my appraisal indicates repairs?

Sometimes an appraiser may require further investigation of an item. For example, if they see a stain on the ceiling, this could be an active leak. In this case, a roof inspection would then be required.  Appraisers are not inspectors.

What is the difference between an FHA and Conventional appraisal?

Very little. In years, past FHA built a reputation of being more strict. In today’s market; it is simply not true. Today, they both use the same form, providing the same information. Both are looking to ensure the home is safe, sound, and secure.

Why do I have to pay for the appraisal up front?

Appraiser work for a third party vendor, not for the lender directly. And so they require payment at the time of service.

How long does an appraisal take?

Most lenders allow ten calendar days.  Often it may come earlier than that.

I don’t see my question listed?

Give us a call.  We are here to help!