Q: What Goes Into the Appraisal Process?
This is a rundown of the full appraisal process so you know what to expect.
Today I’m covering what exactly goes into the appraisal process.
An appraiser is a state-licensed professional who is typically hired by a lender to determine an opinion of value on a property. The lender will usually order the appraisal through an AMC (appraisal management company). This keeps it fair, instead of them calling in a friend to do it. Then the chosen appraiser will contact the seller’s agent and schedule the appointment.
If the buyer is using a government-backed loan such as FHA or VA, they will ensure the property condition fits their guidelines. The main things they evaluate inside the home are safety and health concerns such as chipping paint, missing floors, or major visible damage. If the loan isn’t government-backed, the guidelines are a bit less restrictive; however, they’ll still flag significant damage or safety concerns. Regardless, the main objective is determining the property’s value, so they’ll also measure each room and discover the total square footage.
Afterward, they’ll use technology to find comparable property sales within a radius of the house and time period of the appraisal, then drive by those comps to confirm their condition. Finally, the appraiser will submit their full 50- to 60-page report and value back to the AMC, who sends it to the lender, who then sends it to the client and their agent. Hopefully, if you’re the buyer, the appraised value is over the contract price, or right at that price if you’re a seller. If that number is considerably different, it may be time to renegotiate.
If you have any questions about appraisals or real estate in general, don’t hesitate to reach out via phone or email. We look forward to speaking with you.