What should an appraisal cost

A home appraisal is a licensed or certified appraiser's opinion of a home's value. The appraisal is based on research of recent sales of comparable homes in the area, an analysis of the property and the appraiser's judgment. The mortgage lender requires an appraisal to help gauge risk of making a loan.

The property serves as collateral in case the borrower defaults, so the lender wants to make sure the loan isn't too big compared with the property's value. Here are some of the factors that affect how much you'll pay for a home appraisal:. Government-backed home loans require special appraisals.

Besides estimating home value, these evaluations assess whether the property meets minimum structural and safety requirements set by the federal agencies that will insure or guarantee the loan. As a result, an appraisal may cost more when a government-backed mortgage is involved. The maximum appraisal fees vary by state and sometimes county. Appraisers can ask for permission to charge additional fees for mileage and the extra time required to evaluate complex properties.

The Federal Housing Administration does not set maximum appraisal fees for FHA loans , but simply requires that fees be "customary and reasonable" for the areas where properties are located.

Home appraisal costs are higher in big cities or other places where the cost of living is higher than average. Appraisals will generally cost more for unusual, complex or large properties, which sometimes require additional visits to the sites or extra research to determine value. A luxury waterfront house in a remote area will take more time to evaluate than a starter home in a tract subdivision, for example.

When a mortgage is involved, the lender selects and hires the appraiser, and the mortgage applicant pays for the home appraisal. That means the buyer pays for the appraisal for a home purchase, and the homeowner pays for the appraisal when refinancing a mortgage. No lender is involved when you're buying a home with cash, so no appraisal is required.

But you might want to get an appraisal anyway to ensure you don't pay more than the property is worth. In that case, you'd hire the appraiser and pay the fee.

When you're buying a home , the lender will order the appraisal after you've made an offer and signed a purchase agreement. When refinancing a mortgage, the lender will order the appraisal after you apply. You can ask to accompany the appraiser on the walk-through of the property as long as it's OK with the lender, according to the Appraisal Institute, a professional association of real estate appraisers. Real estate appraisers consider many details to determine a home's value.

The appraiser will do market research and usually visit the home to examine the property. That means it can be a challenge to satisfy the appraisal contingency within the timeline for the offer to purchase, as appraisers are backed up with new purchases and refinances.

This type of loan is typically made for larger, luxury homes that are located in high-demand areas. Because the mortgage limits are higher than conventional loans, the appraisal costs may also scale higher. In a vast majority of home sales, the borrower pays for the appraisal, with the goal of ensuring that the market value is at least equivalent to the amount of the offer. The lender might cover the cost upfront, but will then typically pass along the expense to the borrower at closing.

But in some scenarios, the seller might decide to order their own appraisal prior to listing or inspection:. Massey sees many sellers using the appraisal as another point of reference to help them make informed decisions about pricing.

The agent will base much of their opinion on current competition — which makes sense, as the property needs to compete with other available properties to obtain the best price. The appraiser rounds that out with data from closed sales, including historic market activity and trends.

An appraisal will help to protect the best interests of both the buyer and the seller and ensure that everyone is being treated fairly. If you inherited a home, Spurgeon recommends getting an appraisal. To a seller, it might seem like the appraiser primarily walks around the house, makes a bunch of notes, and takes some measurements. But there is plenty of behind-the-scenes work that happens after the appraiser leaves the property.

Enter for a chance to win Christmas cash! A good home is priceless. But how do you know how much those four walls are really worth? That last part is important. Is it in a popular part of town? Is it in a good school district? Does it have a remodeled kitchen or a full basement? All of these things go into the official assessment of how much moola a home might be worth on the open market. The mortgage company then uses this report to make sure they loan a suitable amount of money to the buyer—and not more or less than the home is actually worth!

Good question. Instead, a home inspection will flag up any issues or damage the seller needs to address before the buyer agrees to close on the deal.