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When you find a home that’s perfect for you, it’s understandable that you’d want the purchase process to go as fast as possible. But completing a real estate transaction takes time — and with good reason. Everyone involved in the deal wants to feel completely comfortable with the terms and know that everything checks out. That includes the buyer, the seller and, if the purchase is being financed, the lender as well.
After an offer is made and accepted, it is common (and for most lenders, actually required) to commission a home appraisal. The appraisal is a sometimes lengthy but very important step in making sure that the property is actually worth the agreed-upon price. This guide will walk you through everything you need to know about the home appraisal timeline and process.
What is a home appraisal and why do I need one?
A home appraisal is an evaluation of a property performed by a professional who will determine the market value of the home. (It is different from a home inspection, which looks for potential problems that will require repair.) The appraiser’s evaluation is objective and looks at the overall condition of the home, as well as the value of the property based on upgrades and improvements made. He or she also compares the home to similar ones in the area to help determine its final appraised value. That value helps the buyer, and their mortgage lender, know if they are paying a fair price for the property. A home appraisal typically costs about $350, according to HomeAdvisor.
“Lenders are required to obtain appraisals of the real estate being offered as collateral,” says Ken Dicks, a licensed appraiser and director of appraisal compliance at the online appraisal-management platform Reggora. In other words, to cover their investment, the lender needs to make sure the home is worth at least the amount they are lending to finance it.
Contingencies place conditions on the sale of a home, and an appraisal contingency is common in real estate transactions. This contingency means that if a home appraises for lower than the agreed upon sale price, the buyer can choose to walk away from the sale. Low appraisals are not necessarily deal-breakers, however — the buyer could also try to renegotiate the price, or even pay the difference.
How long does a home appraisal take?
A home appraisal typically occurs after a seller accepts your offer to purchase their property, and the process can take several weeks from start to finish. “Depending on the demand of appraisers, appraisals can take between one and three weeks to complete,” says Dicks.
A number of other factors can play a role in determining how long this essential step in most real estate transactions takes. These include the home’s physical location — rural homes that are off the beaten track may take longer to get to than ones more centrally located, for example.
Home appraisal timeline
The first step is scheduling the appraisal itself. This is typically done by your mortgage lender, who contacts a third-party appraiser and requests that an appraisal be conducted. In most cases, these professionals will schedule the appraisal within 48 hours of the request.
At the time scheduled, a professional appraiser will visit the and tour the property that is being assessed. “Typically, the appraiser will complete a viewing of the property to gather key data about the property and improvements,” Dicks says. The home-visit process itself usually only takes about an hour, according to Dicks.
Research and report
Now we come to the part of the assessment that’s actually time-consuming. The appraiser is required to conduct extensive market research and look at similar homes in the area to help determine the value of the property. These comparisons, or comps, help establish the potential market value. With this information, Dicks says, the appraiser delivers “a professional opinion of value, using appropriately applied methodology while adhering to a universally accepted standard.”
An appraisal report can take anywhere from one to three weeks under normal conditions. The time it takes to prepare can be affected by the complexity of the report, as well as the size and value of the property being assessed. But it can also be affected by the schedule of the appraiser and the time when your lending company ordered the appraisal. During busier seasons, an assessment may take longer to complete.
The final appraisal report is delivered to your mortgage lender. Ultimately, the appraisal amount is what the lender will consider to be the home’s value — so the sale price might be right on target, above the appraised value or below the appraised value. The lender will review the report, along with all of the details of the loan being given for the property.
“Oftentimes, lenders will require additional information of the appraiser to ensure compliance with individual loan programs or update information as conditions change during the loan process,” Dicks says.
This process can lead to stipulations added to the loan that have to be met before a final decision is made. This can lead to delays in the closing process and may even push back the closing date.
Appraisal to closing
Once the appraisal is completed and the loan has been updated, if necessary, to reflect all the relevant information, the mortgage underwriter will assess it and determine if they want to approve or deny the loan application. If approved, the homebuying process continues and you can set the official closing date on your new home.