Home appraisal are widely utilized in real estate to establish property worth for a range of objectives.
A home appraisal plays a crucial role in any transaction, whether you are applying for a mortgage to buy a home, refinancing your current mortgage, or selling your property to a buyer other than an all-cash buyer.
Even without an active real estate transaction, homeowners can benefit from the effort of determining how much to ask for their home on the market or evaluating the financial worth of their estate.
No matter what the purpose is, understanding and considering the cost of a home appraisal is important. So, let us try to understand what a home appraisal is, how much it costs and what factors affect its cost.
What Is A Home Appraisal?
A home appraisal is an assessment of the worth of a home by an appraiser who is licensed or certified to do so. Research into previous sales of nearby comparable homes, a property analysis, current market trends, and the appraiser’s professional opinion support the evaluation.
In simple terms, a house appraisal is a professional’s estimate of the market value of a residential property at a certain time.
Every time a mortgage, refinancing, or sale of real estate is involved, an appraisal is necessary. A home appraisal is an unbiased and objective professional opinion about a home’s value.
The law requires independent, third-party contractors or companies not connected to a bank or lending organization to perform appraisals.
If the transaction involves a purchase and sale of the property, assess the contract price for the home in light of its condition, location, and attributes using the appraisal.
If it is a refinance transaction, the appraisal ensures the lender that he/she isn’t lending the borrower more money than the house is worth.
How Much Does A Home Appraisal Cost?
The lender typically requests that the appraisal be performed since the appraisal mainly serves to secure the lender’s interests.
The borrower often pays the fee. However, if the homeowner requests a private appraiser, they become responsible for paying the fee. You can’t negotiate to lower the price because you can’t change the fixed cost of the home appraisal fee.
The cost of an appraisal can range from $600 to $2,000. But you’ll pay less for a single-family appraisal than a multifamily one.
Due to their size, multifamily properties typically take longer to appraise, bringing their assessment fees closer to $600.
A single-family house evaluation typically costs between $300 and $450. However, this can change depending on a variety of factors. These factors include the size of the home, the property’s value, its condition, and so on.
As mentioned above, a large property will typically cost more to appraise. In bigger cities or in locations where the cost of living is higher the range could be $500 to $800 or more
The Dodd-Frank Wall Street Reform and Consumer Protection Act regulates professional appraiser fees in part. These rates must be reasonable and customary for the geographic market.
The Appraisal Institute, an association of professional real estate appraisers, recommends that qualified appraisers are licensed or certified in each state and have a good understanding of the neighborhood. Federal regulations stipulate that the appraiser must be impartial. He should be free from any direct or indirect financial interests in the deal.
What Does A Home Appraisal Fee Cover?
A home appraisal fee usually covers the expertise of the appraiser, his/her visual on-site inspection of the home. This involves taking pictures and measurements, the appraiser’s analysis of recent comparable sales. The home appraiser provides the appraisal report summarizing the unbiased assessment of value.
Factors Affecting The Home Appraisal Cost
There are various factors affecting the cost of appraisal. We have listed some common factors below. So, let us jump on to these factors:
- Property Size – If the property size is small, conducting the home appraisal will not take much time. As a result, the cost of the home appraisal will be lower. Similarly, if the property size is larger the appraisal would cost higher.
- Property Type – The type of property also affects the cost of home appraisal. Whether you own a single-family or multi-family house both will affect the cost. A property often costs more to appraise the additional bedrooms and bathrooms it has. Multi-family homes would also probably deviate from the typical sales comparison approach to value estimation, which can raise the price.
- Location – The type of property location also determines the home appraisal cost. Big cities and areas with greater than average living expenses have higher appraisal fees.
- Mortgage Type – Lenders raise the home appraisal cost for jumbo loans. It is because these loans are riskier and not insured or guaranteed. As for the other loan categories, effective from December 2021, the Department of Veterans Affairs increased appraisal fees for VA loans by anywhere between $25 and $400 depending on the region. According to Chase Bank, the typical cost of an FHA loan is the same as that of a standard appraisal.
- Seasonal Conditions – The appraiser may charge you more during certain times of the year if the situation makes it harder for them to access the property.
Home appraisals can help understand the financial value of a home for making informed decisions.
Any situation you come across while buying, selling, or refinancing a property would benefit from having a basic understanding of how home appraisals works and how much they cost. The cost of home appraisal varies depending on factors such as the size and complexity of the property.
Get an appraisal from a qualified professional appraiser for accurate and reliable information on your home’s value. Connect with us today for more details!