Do I Need an Appraisal When I Buy a New Home?

When you get ready to buy your new home, a home appraisal is part of the loan approval process. If you are a newly degreed attorney, an established attorney looking for a first home, or if you are ready to refinance your home, Attorney Mortgage can help you understand the residential appraisal. 

What is a Home Appraisal?

A home appraisal is different than a home inspection. An appraisal is done before closing to determine the overall value of a home and address problems such as electrical issues or roof damage. The mortgage lender typically orders the appraisal, but the buyer will pay for the appraisal service as a part of closing costs. Appraisal costs range from $450 to $600, but this cost can vary according to your location and market conditions. 

A residential home appraiser provides an opinion of value for the subject property. “This could be a market value, liquidation value, insurable interest, etc., depending on the nature of the assignment,” says Matt Harmon, Strategic Real Estate Advisor at Real Estate Bees in Raleigh, North Carolina. “The appraiser’s inspection of the property is generally limited to that of the typical visitor.”

Mortgage lenders approve loans based on what the home is worth, and this is where the appraisal comes in. The appraisal helps lenders gauge the risk of approving a loan on a certain property. The property is collateral in case the borrower defaults on the loan. If the appraised value is less that the selling price of the house in question, the lender will not approve the loan. Attorney Mortgage can help you come up with some possible solutions if that happens during your loan process.

Does an Appraiser Need Certifications or Licenses?

An appraiser is typically licensed and certified by a state board and might be a member of a few different professional organizations. Appraisers are usually required to provide appraisal services that are compliant with the Uniform Standards of Professional Appraisal Practice (USPAP). 

“The main points of USPAP are that the appraiser must be ethical, not be misleading, must follow the normal process that the industry would follow and most important, must be unbiased and independent in their analysis,” says Glen Kangas, Strategic Real Estate Advisor for HouseCashin in the Los Angeles metropolitan area. Kangas is also a Certified Residential Appraiser who has been serving Southern California for 30 years. “The appraiser has to follow a process that is thorough and detailed. The appraiser also has fiduciary responsibilities to the client which are similar to those that attorneys have.”

Is an Appraisal Necessary?

A home appraisal aids the mortgage lender in determining the value of the home. “It is important to note that the appraiser is the only party to the transaction that is independent with no ‘skin in the game’ meaning, the appraiser gets paid for their opinion and it is not contingent on the property closing escrow at a certain price like all other parties in the transaction,” says Kangas. “The appraiser is similar to an umpire or referee in sports and his/her job is to ensure, using proven methods of valuation, that the contract price is reasonable or not.”

The appraiser works independently of other professionals in the home buying process, adds Harmon. “While all professionals serve a certain role, it is imperative that the appraiser is independent from other parties and provided a valuation product that complies with USPAP and ethical standards.”

Attorney Mortgage can help you find a certified residential appraiser to manage your home valuation process. “The more information you can provide to the appraiser regarding the property being appraised the better,” says Harmon. “This can include a list of items that have been done to the property such as certain updates or upgrades done that might increase the value of the property.”

What is Considered during a Home Appraisal? 

Appraisers look at several features, inside and outside, in order to determine the value of a home, including:

• The age of the home
• The location of the home
• The size of the home as well as the size of the lot
• Number of bathrooms
• Number of bedrooms
• Roof type
• Foundation
• Heating and cooling systems
• Landscaping and outdoor amenities such as a sunroom or a patio area
• Lighting fixtures (indoor and outdoor)
• Pool system

The appraiser might consider whether the home has had improvements or upgrades, or they could even look at unappealing factors of the home. Additionally, the neighbors play a role in the appraisal – an appraiser will consider comparable homes and recent sales of similar properties in the area. 

Although time frames vary, it may take a few days to a week or so to receive a report from the appraiser. 

If you are a newly degreed attorney, an established attorney looking for a first home, or if you are ready to refinance your home, Attorney Mortgage can help you navigate the loan process. We can help you maneuver those obstacles. Begin to build long-term wealth and create financial flexibility through home ownership today.  Contact us here or call (816) 456-7478.