There are three main parts to a home appraisal:
Appraisals protect both you and your lender from purchasing an overpriced home or refinancing for more than your home is worth.
No. By law, an appraisal must be done by a third party who has no interest in the outcome of the appraisal. While we place the order for the appraisal, we do not conduct it ourselves.
Most appraisals cost between $200 and $600 but keep in mind that the cost can exceed that range. The cost of an appraisal varies based on the type and location of the property. Your appraisal may cost more if you have a multiunit property instead of a single-family home, for example, or if you live in a remote area.
Most appraisals are valid for 120 days. Your appraisal must be valid through your closing date. If your appraisal expires before your loan closes, we may be required to get an updated appraisal.
According to the law, an appraisal must be managed by a third party who has no interest in the outcome of the appraisal. The mortgage industry refers to that third party as the appraisal management company (AMC), and they alone are responsible for selecting a licensed, independent appraiser.
Your appraiser must be licensed or certified by a state regulatory agency that enforces the Uniform Standards of Professional Appraisal Practice, as well as any state and federal regulations. Your appraiser is licensed in your state so that they are familiar with the geography and statistics of your area.
No. By law, neither you as the client nor the mortgage lender or mortgage broker can speak directly to appraisers regarding a home’s valuation assessment. If you have questions about your report, please contact your Mortgage Loan Advisor – they will assist in getting the right people involved to address your concerns with the appraisal.
Your appraiser will visit your home to assess its size and condition, and then compare it to similar homes in your home's market area to provide you and your lender with a professional opinion of your home’s fair market value. Your appraiser may adjust the value of your home based on its features and amenities – for example, having an extra-large garage or being located in a cul-de-sac can increase the value of your home.
Since no two homes are exactly alike, appraisers make adjustments to fine-tune your home’s value according to comparable homes in your area. For example, a recently sold home a few blocks from yours has the same number of bedrooms, bathrooms and square footage, but it overlooks a golf course and has a screened-in porch. If your home doesn’t have comparable views and amenities, your appraiser will make adjustments to the price of the comparable home to come up with a value for yours.
Before appraisers visit your home, they research your home’s neighborhood, age, location and type, along with recent home sales data and more. With all of this information, the appraiser only needs to assess the size, condition, function and quality of your home during the inspection.
We usually can’t finance an amount higher than the appraised value of a home. When an appraised value is lower than the agreed-upon sale price of a home, the buyer must make up the difference, or the seller must decrease the price. If you’re refinancing, a lower-than-expected appraisal value can affect the terms and structure of your loan. You can pay the difference in your closing costs, but if the appraisal is much lower than the loan amount, this may not be an affordable option. Unfortunately, if there isn’t a loan available based on your home’s value, you may have to wait until the values in your neighborhood start to bounce back.
Keep in mind that a number of factors come into play when determining the value of your home, including square footage, features, location and more. Appraisers need to compare apples to apples. For example, you can’t compare a five bedroom, bi-level home to a small, two-bedroom ranch, even if they are side by side. Similarly, homes of the exact same size and features in different locations will also vary in value. Values also increase and decrease regularly, depending on when your neighbors home appraised can also be a factor.
Online estimates might not have up-to-date information, and nothing can replace a real person doing a live walk-through of your home and seeing firsthand all that it has to offer. It’s important to know that in the post-bubble lending market, many home loan and appraisal guidelines are government regulated and much stricter. These guidelines are put in place to protect consumers from getting mortgages they can’t afford, or from getting large loans on houses that don’t have value. Utah is also a non-disclosure state and information on previously sold homes may not be readily available.
Values can fluctuate throughout the year due to consumer demand, nearby foreclosures, short sales or other factors.
Repairs required during the appraisal process usually involve structural safety concerns, such as steps with no handrail or water intrusion through your foundation. If you’re buying a home, it’s generally the seller’s responsibility to complete the required repairs before closing. If you’re refinancing, you’re responsible for completing all the necessary repairs before you close.
Addendums are changes to your appraisal report that occur during underwriting when we double-check the details of your appraisal. Usually, addendums result from the lender asking for clarification on the required repairs. Addendums are also made when we find small clerical errors, missing photos or incorrect adjustments. If there’s a significant change that could alter your loan, we’ll reach out to you to let you know your options.