The Appraisal Process When Purchasing a Home

The Appraisal Process When Purchasing a Home

What Does An Appraiser Look For? An appraiser looks for a home’s “fixed qualities” like location, age, construction quality, total square footage, size and type of rooms, and functional layout. They’ll also look at the homes systems, such as HVAC and plumbing, as well as health and safety factors and code compliance.

The appraiser is using background research on the value of similar, neighboring homes, and their visit to the property in order to give a qualified opinion as to the value of the home, which is then given to a lender. Kaitlyn Baco, Sales Associate with ERA Justin Realty, says, “The purpose of the appraiser providing this information to the lender is so the lender can assess whether or not lending the amount requested would be recouped in the event the buyer defaulted on the loan and the property had to be resold.”

Some question how an appraiser’s role is different than a home inspector, and why does a buyer need both opinions? Kaitlyn further explains, “An inspector assesses the condition of the structure and systems of the home and provides their opinion on its current living condition. This is done in order to give the prospective buyer, and possibly the lender, an idea of how much more money they may or may not need to have to put into the house in the future. This could help a real estate agent and all parties evaluating the information determine if the asking price should be negotiated or adjusted.

The Valuation Process

Believe it or not, the valuation process begins before your appraiser even steps foot onto your property. The appraiser will start by getting a feel for the neighborhood and how your house fits in. Some things they consider include the home’s proximity to the highway, noise level, power lines or public access across the property, whether or not the home looks cared for and maintained, and landscaping and topography.

Once inside, the appraiser is not there to consider your choice of paint color, the pattern of your wallpaper or the curtains you have covering the windows. Rather than these easy-to-change cosmetic detail, the appraiser will be looking at the quality of the finish, and materials used. The appraiser will look to see if the walls are dented, pitted, and marked with chipped woodwork. In addition, the appraiser will assess the home’s layout. In the majority of homes, the design is standard and will not impact the value of the property. However, if the floor plan is unusual or the placement of the various rooms is atypical, then the appraiser may take this into account when calculating their value.

Other rooms that could affect the appraisal price include the kitchen and bathroom and attic. In both the kitchen and bathroom, the appraiser will consider the age and type of fixtures and fittings as well as the floors throughout the home. If you have an attic, insulation levels are taken into consideration along with the access to the attic, whether it has been “finished” and whether or not it has heating or cooling. Speaking of heating and cooling; the type of heating of the home will be noted as there is a difference in value between homes with forced air heating, hot water baseboard heating systems and radiators.

All of this information from both onsite and offsite evaluations is compiled in a report and given to lender to determine the appropriate lending amount.

A lot goes into a real estate transaction, including the appraisal process. To help you make sense of it all, it’s imperative to have a professional, like Kaitlyn, walk you through the steps. To reach out to Kaitlyn or any of our real estate professionals, contact us at 201.939.7500 or 201.438.0588.