After climbing steeply for the last couple of years, the median sales price for houses in the US is finally leveling off. At the end of the third quarter of 2023, the median cost had reached $387,000. With house prices constantly fluctuating, you need a seasoned professional to help you gauge the value of your home.
Whether you’re applying for a mortgage, refinancing, or selling your home, you need a home appraisal. But that throws up more questions, including what is a home appraisal and how much does a home appraisal cost?
We’ve created a home appraisal cost guide to help you understand every part of this process. We’ll look at the home appraisal cost and what you can do to keep the cost of a home appraisal down.
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How much does a home appraisal cost?
The cost of a home appraisal for a single-family home typically ranges from $300 to $500 on average. Costs may vary based on location and other factors discussed below. Appraisers are required to charge customary and reasonable service fees, and you will receive a detailed report outlining the valuation process and the final valuation after the appraisal is completed.
How does a home appraisal work?
You may be wondering, How much do appraisals cost for homes? But before tackling that question, we need to understand how they work.
Home appraisals can only be conducted by state-licensed and certified professionals. Home appraisers are independent – they do not work for the lender.
They assess the value of your home by comparing it to other homes sold in the same area. They take into account factors like:
- Square footage
- Condition of the home
- Style of the house
- Age of the house
- Building materials used in construction
They will inspect your property inside and out, looking for features and faults that could affect its value. Next, they’ll research records about the property and what’s happening in terms of development in the local area. Finally, they’ll produce a report that includes their valuation and reasons for arriving at that figure.
What the home appraisal includes
It’s important to remember that the appraisal does not just look at the value of the home. It also takes into account the land value and other permanent structures on the land.
Appraisers are impartial and experienced, and they can look beyond minor flaws. If the house is a little untidy and the lawn needs a trim, don’t worry. Minor factors like these will not affect the outcome of the appraisal.
There are some factors the appraiser will look at that you can do nothing about. This includes:
- Local amenities – shopping facilities and schools
- Access to transportation
- Road connections
- Vacant or condemned lots in the area
Why do you need a home appraisal?
A home appraisal is normally part of the lending process. For example, if you are buying a home with a mortgage, you will need a home appraisal. This is how the bank protects itself and assesses the level of risk involved with lending you the money you need.
You may also need a home appraisal if you want to refinance your current home. You may want to borrow more money for home improvements or other reasons. The mortgage lender will usually make a home appraisal a condition of the loan.
Important for sellers, too
Although buyers need home appraisals, they are of interest to sellers, too. If your home is in poor condition, the appraisal may be low. A low valuation may lead to the buyer being unable to borrow enough money to pay the price you have agreed on.
The buyer may come back to you and try to negotiate a lower price for the property. If you’re selling a home, you should never consider a deal to be set in stone until the buyer receives a favorable appraisal report. It can take time for the appraisal to be completed, which can be problematic if you want to sell quickly.
Not just for mortgages
If you’re buying a home for cash, you’re under no obligation to get a home appraisal. However, it may still be a wise move so that you do not pay too much for the property.
Who pays for the home appraisal?
Normally, the borrower pays the home appraisal cost. This could be the buyer or the homeowner if they are refinancing.
It’s a significant amount and crucial to obtaining the financing needed to complete the purchase. It’s a cost that the buyer must pay out of pocket, whether the deal completes or not.
Home appraisers may work for a flat fee or may be paid by the hour. But if an appraiser asks for a percentage of the home’s final value as payment, that’s a red flag. If an appraiser wants to work on that basis, find another one.
What factors influence the appraisal Cost?
To answer, How much does it cost for a home appraisal? We need to bear in mind that there are several factors involved. Unfortunately, some of these are beyond your control. But there are some things you can do to keep the cost down.
1. Size of the home
It makes sense that the bigger your home, the higher the cost of the appraisal of the house! The evaluator has more acreage to cover to assess the entire house accurately. This will take them longer, and consequently, they may charge more for it.
2. Condition of the home
Poorly maintained homes throw up lots of red flags that make appraisers antsy. This may drive up the cost of your home appraisal, as they need to research the property’s condition.
On the other hand, well-maintained homes are easier to appraise. There are more locally available comparables, and the appraiser can have more confidence in their valuation.
Bear in mind that home appraisers will look at:
- Health and safety issues
- Structural integrity of the building
- Visible flaws
If they have concerns, an appraiser can request additional inspections. For example, they may notice a problem with the roof. The appraiser could refuse to complete their report until they have received a copy of the roof inspection report.
The takeaway? For an easier and less expensive appraisal, keep your home in tip-top condition.
3. Location of the home
If you live in a big city or an affluent part of the country, the answer to how much home appraisals cost may be higher than elsewhere. Also, if you need a home appraisal for a property way out in the boonies, you should expect the cost of the home appraisal to be higher.
These appraisals cost more because:
- The appraiser has to travel further to view the property
- The appraisal will take more time to conduct
- There are fewer comparable properties, meaning more research for the appraiser
You can’t pick up your home and move it closer to an urban area! This is one that homeowners have to take on the chin.
4. Type of mortgages
Some types of mortgages require special appraisals. This includes government-backed mortgages. The property must meet certain structural and safety requirements to gain approval for FHA loans.
There are also special requirements for VA Home Loans that are guaranteed by the U.S. Department of Veterans Affairs. These loans limit the fees that appraisers can charge for their services.
How is an appraisal different from an inspection?
It’s easy to confuse the terms home appraisal and home inspection. Both are very important when buying a house, but they’re very different things.
The purpose of a home appraisal is to ascertain the value of your home. As this home appraisal guide has shown, it is obligatory, and several factors influence the final valuation. But it is not the role of the home appraiser to inspect the home.
A home inspection is not mandatory but is always recommended when buying a home. It tells the buyer about the condition of the home. It looks at:
- Interior
- Exterior
- Structure, including the foundation
- Roof
- HVAC system
- Plumbing
- Electricals
You will receive a detailed report, which may include recommendations for work that needs to be completed urgently. Buyers may use the home inspection to negotiate the price down.
Sell your house without the hassle
The process of getting a home appraisal can be time-consuming and expensive. Plus, the home appraisal cost is not cheap and can rise depending on the home and its location. What if there were a simpler way?
If you’re looking to sell your home without the complication of a home appraisal, talk to iBuyer.com. We connect you with trusted buyers who are looking to buy homes as-is. No appraisals, no renovations, no hassle.
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