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Home appraisals are standard as part of the purchasing process, but how long does an appraisal take?
Real estate prices have soared since 2020. As a result, America’s real estate market has never been hotter, with the median house price in Q3 2022 reaching $454,000. Qualifying for a mortgage and getting together the down payment is the foundation of starting your journey to homeownership, but countless buyers underestimate the complexity of the process.
Everyone wants their home purchase to go through as fast as possible. Today, the average home stays on the market for just 38 days, but there are essential steps you must go through, including a home appraisal.
Let’s answer important questions like, “When does an appraisal happen?” and “How long does an appraisal take?” so you’re ready to realize your dreams of owning your own home.
How Long Does a Home Appraisal Take? – Table Of Contents
What is a Home Appraisal?
Home appraisals are an integral part of buying a home. A licensed real estate appraiser will assess the home you want to buy and provide an estimate of the home’s value. The appraiser has no relation to the buyer or the seller, so the appraisal report you receive is entirely unbiased.
Appraisals aren’t optional in most circumstances. For example, your mortgage lender will likely require one to find the fair market value of the property. The appraisal ensures the lender isn’t lending more than a property is actually worth.
It’s also vital for you. Appraisal reports confirm to buyers that they’re not overpaying for the property.
Physical Home Inspection
Appraisers must visit a home to inspect the interior, exterior, and lot. They’ll gather various information, such as the features included and the property’s condition.
With this information, they’ll complete a Uniform Residential Appraisal Report. This report will also show specific measurements of the lot and every room in the house. These reports also include pictures of what the appraiser has looked at.
Comparable Home Sale Assessment
After assessing the property, the appraiser moves on to the comparable home sale assessment. This is a fancy term for checking the amount recently sold properties sold for in the area. Appraisers will take a quarter or a half-mile radius, but in rural areas, they may extend this radius to increase their sample size.
Appraisers will look for properties that are similar in:
· Bedroom/bathroom number
Appraisers also have access to the inspection notes for recently sold properties. With a broad overview of comparable sales, the appraiser will decide on a fair market value. This number will be forwarded to the lender, and – assuming there are no issues – you can move forward in the purchasing process.
How Long Does an Appraisal Take?
Before discussing the issue of “How long does a home appraisal take?” it’s important to discuss what goes into the appraisal, when an appraisal is ordered in the loan process, and whether there are any differences between rural and urban real estate.
So, when does the bank order an appraisal?
Home appraisals occur after a seller accepts your offer. Your lender will initiate the appraisal process after they receive notification that the offer has been accepted. The process can take several weeks to complete.
>> Real Agent Answers: How long does an appraisal take?
Some areas have longer appraisal timelines because of excessive demand for appraisers. Hotter real estate markets tend to suffer from this problem more.
Appraising a rural home off the beaten path will also take longer. If an appraiser has to spend longer getting to a home, you may have to wait longer for an opening.
Home Appraisal Timeline
Figuring out how long it takes to get appraisal results is challenging because the process can seem alien to the first-time or inexperienced buyer. However, all appraisers follow the same steps as part of a standardized process, no matter where you live.
The Lender Orders an Appraisal
Now that you know when an appraisal happens, you should know that your lender will order one when a formal offer is submitted and accepted.
Your mortgage lender will contact a third-party appraiser of their choosing and lodge a formal appraisal request. A professional can schedule an appraisal within 48 hours of receiving a request.
As the buyer, the home appraisal cost will be billed to you because it’s a service required to get approved for your mortgage. According to Bankrate, the average appraisal cost is $350, but regional differences exist.
Note that just because the request is accepted in this timespan doesn’t mean they’ll rush out to inspect the property immediately.
The Appraiser Visits the Home
The next step is for a professional appraiser to visit and tour the property. The viewing will include exterior, interior, and lot inspections to collect critical data about the property and any improvements made by the seller.
Home visits rarely take longer than one hour to complete for an experienced appraiser.
Appraiser Evaluates and Completes their Report
The most time-consuming part of completing an appraisal is the evaluation and reporting stage. First, an appraiser will utilize the information they have to conduct in-depth market research. Then, they’ll look at similar homes in your area to find an aggregate sales price.
Comparison establishes potential market value and serves as the primary driving force of the final appraisal figure. They’ll apply a universally accepted methodology and standard to generate a dollar number.
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So, how long does it take to get an appraisal back at this stage?
Most experts agree that it should take one to three weeks. However, larger and more complex properties may lead to an appraiser needing additional time to complete their report. Your appraiser’s schedule and when your lender ordered the appraisal are fundamental to how long it’ll take.
What Happens After You Get the Appraisal Report?
Knowing how long an appraisal takes is only one part of the story. Appraisals aren’t mere box-checking exercises. The results of an appraisal can alter the course of a real estate transaction, including derailing it entirely.
Your results will also determine how long after appraisal to close the estimate because both buyer and seller may need to return to the negotiating table.
Appraisals can add considerable wrinkles to the transaction, but only three pathways exist.
Appraisal Value Matches the Offer
The appraisal report has come back, and the appraiser agrees with the home’s market value. With the report in hand, everyone is happy, and the sale can be closed.
It’s pretty rare for an appraisal to match the value of a home exactly, so this is the least likely outcome.
The Appraisal is Higher than the Accepted Offer
Let’s say the appraisal has determined that the home is worth more than the agreed-upon price. For example, you may have agreed to pay $300,000, but the home is valued at $320,000.
The seller can’t pull out of the sale because an offer has already been accepted. For the buyer, they get to enjoy some built-in equity. In the above example, the buyer would start with $20,000 in equity in addition to whatever money they give to their lender as a down payment.
The sale can proceed as planned.
The Appraisal is Lower than the Accepted Offer
Appraisals protect lenders and buyers from paying too much for homes that aren’t worth their asking prices. Several options are available if an appraiser returns with a figure lower than the agreed-upon price.
· Request a Review – Licensed appraisers, follow the same methodology, but professional interpretation also forms part of the equation. Another appraiser may have a different opinion. Requesting a review means asking an independent appraiser to repeat the process and comment on the first appraisal’s accuracy.
· Pay the Difference – Nothing is stopping you from paying the difference. Many homeowners in 2023 will pay extra because of bidding wars within hot real estate markets. Your lender may not offer additional financing, but you can pay the difference when closing. You can also deduct some closing costs from your annual taxes.
· Ask for a Price Reduction – Another option is requesting that the seller reduce the asking price to the appraisal price. The seller doesn’t have to agree.
· Offer a Compromise – If a seller doesn’t want to lower the price, consider offering a compromise. Splitting the difference can help get the sale through. But, again, the seller doesn’t have to accept a compromise.
· Walk Away – If you’ve signed an appraisal contingency, you can walk away without financial penalties. Always ensure your real estate agent puts an appraisal contingency into the agreement when buying.
Despite a difference between the agreed-upon price and the appraisal price, most real estate transactions end happily, as neither side wants to abandon all their hard work.
Choose a Realtor with Your Best Interests in Mind
Figuring out how long an appraisal takes is designed to complete your real estate transaction as soon as possible. Avoiding future appraisal problems can be averted by working with an honest, trustworthy realtor who can direct you toward worthwhile properties.
At Fast Expert, you can pinpoint the most successful realtors in your area just by entering your city or zip code. Simplify buying and selling real estate with Fast Expert today.