How does home appraisal work?

Hannah Griffith
10 min read
August 23, 2022
how does home appraisal work

How does home appraisal work? A home appraisal is crucial when we decide to buy or sell a home. The correct price of a home can be determined with a valuation report. The valuation report is mandatory when taking out a mortgage; it shows that the property is appraised.

Property valuation is a term normally used in the real estate world and is compulsory when buying a new house or selling an old one. Everyone is curious about what a valuation report entails and how appraisals work. The second thing that comes to mind is how long does it take? Get info about how home appraisals work.

The appraisers consider the following when thinking about home appraisals work. There are many factors to consider, such as the state of the house, its content and surface, the building materials and their quality, its location, the environment, and the facilities provided, energy-saving measures, the degree of insulation, and the type of house, such as a detached or terraced house.

The real estate agent should also collect as much information as possible about your house. A real estate agent can value your home more accurately if he has more information.

What is a home appraisal?

Home appraisals are substantiated estimates of the value of a home. When an appraiser visits your home for a valuation, they will thoroughly inspect it. A valuation report containing the home value of your house will be drafted by the appraiser when he is ready, along with a description of how that value was determined. Your home's value is determined by your appraiser considering the following factors, among others:

  • The location of your home;
  • The condition of your home;
  • The facilities in the area;
  • The size of your house.

Also included in the valuation report is the foreclosure value of a house. As the house will have to be forcibly sold, the foreclosure value is its estimated value. It is estimated that 80% to 85% of an average home's value is lost to foreclosure. A new-build home typically has an approximate value of 90%.

What does a home appraiser consist of?

A home appraisal is not a much easy process. Several factors are crucial in the home appraisal, including:

1. Appraisal Inspection

Normally appraisers put their efforts into reviewing the interior and exterior conditions of the home. It's the appraiser's duty to ensure that the property is safe and up-to-date. During this process, they have to take photos of the major and minor parts of the home. Usually, the appraiser visits the home individually and inspects the whole house, and house owners help him in this process.

a. The exterior of the property

You can live without curb appeal, which is significant in home appraisals. As a result, real estate agents will look at visual elements such as the style of the property, the painting quality, and the state of the property when conducting a market appraisal.

b. The interior of the property

It's time to investigate what's going on inside. Room size, improvements, renovations, appliances, layout, and the quality of the appliances will all be analyzed. To conduct an accurate appraisal of a new home, it is important to compare like for like with similar properties in your neighborhood.

c. Land Size

The land size is an important factor in determining a property's value. Big land sizes are particularly attractive to those who want to build a new home or renovate a property they already own.

d. Other thing that improves the value of the place

Your home's appraiser will note various attractive features depending on the market in which it is situated. It is worth mentioning in your advertising materials if your home has a swimming pool, air conditioning, built-in wardrobes, a double garage, or great appliances, as these are all good value-adds.

2. Research

Research is the basic factor of the appraiser's value determination. He should have info about the market and the price of comparable houses. There are several homes in the neighborhood or nearby that share the same features as the home in question.

Appraisers typically review government and MLS records to compile comparative information during the home appraisal. An MLS (multiple listing services) database contains information about home listings and sales posted by real estate professionals. Most of the information in the database is available for free online, despite being technically private.

3. Valuation approach

A value estimate might be determined by comparing the home's sales prices to the land's values. Alternatively, it may be determined by taking a cost-based approach, in which the appraiser estimates how much it would cost to build the home today plus the land value. The valuation approach plays important role in the home appraisal process.

What is an Appraisal report?

The mortgage institution usually asks for a wide range of home loan documents, also called mortgage documents, when you apply for a mortgage. To avoid misunderstandings and delays, you should submit all mortgage documents as quickly as possible and according to the requirements of the mortgage institution. We will discuss the valuation report here, one of the most important mortgage documents.

Appraisals are valuations of properties. It includes, among other things, an official home valuation. A valuation accompanies an appraisal report. Most lenders require an appraisal report to determine whether a home is worth enough to qualify for a mortgage. To process a mortgage application, a valuation report is required. 

A home appraisal report is a written statement that an appraiser provides after estimating the property's value. There are several situations in which this report can require such as damage of building by storm. It provides us with an estimated repair cost.

After the appraiser has done the whole estimate, the valuation report is drawn up. The following parts are included in this report:

  • The maintenance condition of the house is discussed.
  • Substantiation of the value judgment.
  • The private law aspects are explained.
  • The report contains a description of the house and its surroundings.
  • Part is about pollution.
  • Public law aspects are discussed.

How long does a home appraisal take?

Home appraisals depend on the house size; it evaluates how many extra features your house has. The inspection usually consists of the following parts:

Inspect, measure and photograph the exterior 

It includes measuring the house and any outdoor parts, such as sheds, porches, decks, etc. In addition, this consists of taking pictures of all sides of the house and any other feature that adds value. A lot of information is also already available from the broker via the land registry.

Interview with the homeowner

After the inspection, the homeowner will be interviewed to see if any renovations or repairs have been made. Appraisers look at the actual age of the home and then factor in repairs and renovations to estimate an effective age, which determines the home's value. 

This is when the homeowner should let the appraiser know if the roof, other plumbing renovations or repairs have been made, and other renovations or renovations. Providing this in advance can save time and help the homeowner guarantee that the list is as complete as possible.

Get the answer to how long does a home appraisal take? The above items are a typical valuation inspection. The time to complete them depends on the size of the house but also partly on the homeowner himself. Some appraisers are quicker than others, but if the appraiser gets in and out within 10-15 minutes, there may be some cause for concern, especially if you've made significant improvements to your home that the appraiser doesn't even ask about.

Any time an appraiser is in an older home, and it appears that renovations have been made, they should ask when they were completed. The appraisal form even wants the appraiser to note when the kitchen and bathrooms have been updated or remodeled, so the appraiser needs to find out from the owner.

When to do a home appraisal & is it required?

Lenders typically require an appraisal when you apply for a home loan. Lenders must approve a home before closing can occur after a mortgage application has been approved and an offer has been accepted. It is a safeguard that lenders use to prevent lending money for properties worth less than the accepted offer. This will allow the lender to recoup their money if the borrower defaults on the loan.

Home appraisers are hired by lenders or mortgage brokers. The appraisal ordered by the lender will count in a mortgage transaction, not a borrower's second appraisal of the property they wish to purchase.

The home appraisal that occurs during the appraisal should never be used before a home inspection. An appraiser is looking to find the house's value, so their inspection will be different than an inspector looking to find problems with the house. They will look for different things as they walk around the house. The inspection during the appraisal process will not be as thorough as a separate home inspection. As a potential homeowner, getting an inspection along with your appraisal is in your best interest. 

Who does home appraisals?

An appraiser who is certified by the state conducts a full home appraisal. State licensing and certification requirements vary across states, but all require appraisers to be licensed.

There are four types of appraiser classifications:

  • Real estate appraisers who are certified.
  • Real estate appraisers with certification in residential properties.
  • Real estate appraisers are licensed.
  • In a trainee appraisal position, a trainee appraiser works under the supervision of an appraiser with certification or licensing.

It will also depend on the type of property you plan to buy and which certification you want your appraiser to have. An appraiser certified in residential real estate or general real estate will be able to evaluate properties with four units or more. They can appraise any building.

It is also mandatory for appraisers to be impartial third parties - they cannot have any relationship with or involvement with anybody else involved in the transaction. An unbiased entity qualified to offer an opinion regarding the value of a property should do so. Home appraisal cost depends on the authenticity and certification of the appraiser. Mostly, it is fixed according to areas.

The Bottom Line: How does home appraisal work?

  • The duration of the valuation of a home is usually not very long, an hour on average. In addition to a thorough inspection, the appraiser will also ask the owner questions. To shorten the time and ensure that all parts of the house are included in the report, it is wise to send the appraiser an overview of renovations, renewals and other matters important for the house's condition. It is also important to collect information before an appraiser visits so the valuation can run more smoothly. In any case, it would be better to prepare for a home appraisal and find out more information about how it works. 

  • It's not just a homeowner who wants an estimate for their home. A buyer has every interest in taking an interest in his local real estate market to check that he will not pay too much for his house. Before making an offer to purchase, the buyer can therefore look for a fair estimate of the house he has spotted. It can avoid overpaying for a property and reduce the mortgage needed for financing.

  • Above all, the query of how does a home appraisal work is important, but the professional real estate appraisal of a property by an expert creates a feeling of confidence among potential buyers and buyers. In addition, during visits and negotiations, buyers tend to want to lower the price of a property. Suppose the sellers have had their house or apartment appraised by a professional real estate agent. In that case, they will not be destabilized and remain in control of the situation during the negotiations.