When you're considering buying a house, there are two sides to the story: the seller's asking price and the actual value of the property. This is where an appraiser steps in.
What is the job of an appraiser?
An appraiser's job is to determine the current value of a property. Most of the work is done on-site where the appraiser will:
- Conduct a room-by-room walk-through to determine interior condition.
- Walk the length of the property to determine exterior condition.
- Evaluate any amenities such as a swimming pool, finished basement, or built-in bar.
- Note any health or safety code violations.
- Record the layout of the property.
Off-site, the appraiser may also evaluate the current real estate market in the neighborhood to help determine the value of the property.
How do you know if an appraiser is qualified?
Typically, your lender will choose an appraiser. The appraiser should be state-licensed or have other certification. If the appraiser is a member of a professional organization such as the Appraisal Foundation, he or she most likely will adhere to certain ethics codes and rules of conduct. However, not all states require certification, so do some research before you start.
Who hires the appraiser?
Usually, the lender or financing organization will hire the appraiser. Because it's in the best interest for the lender to get a good appraisal, the lender will have a list of reputable appraisers whom they have hired in the past.
The loan agreement normally contains a set value for the appraisal of property. Whoever takes out the loan pays for the appraisal, unless the contract specifies otherwise. Then the buyer pays the fee in the closing costs. If a seller is motivated, he may pay for the appraisal himself to back his asking price, which benefits the buyer by reducing closing costs.
The lender may not adjust the fee after hiring the appraiser. Expect an average range of $300 to $600 depending on the size, property value, and location. Different appraisal report types take various amounts of effort, which may affect the price.
How long does it take?
One or two hours is the average time spent for most appraisals of property. You should most likely receive the report in three to seven business days on average. The amount of time it takes can depend on the type of report, size of property, and other factors.
What are the benefits?
Think of the appraisal as an investment of your time, money, and effort. It is important to know what your house is worth, and it will help you get your loan approval. Hopefully, this step and the rest of the house-buying process will go smoothly.