The appraisal process is one of the final stages before closing on your purchase or refinance transaction. It is also one of the most important, as it provides the value of the property that your lender will finance. Once you make an offer on the home and have a signed purchase agreement, your mortgage lender will order the appraisal, which is conducted by an independent third party.

Once your appraisal has been ordered, the appraiser will contact you to schedule the appointment, this usually takes one or two weeks based on your location and the appraiser’s schedule. The purpose of the appraisal is to determine the fair market value of a home. This value assures both you and your lender that the price you are paying for the home is fair. During your home's inspection, the appraiser will look at a number of things to determine the value including the following: assessing the general condition of the property, home improvements, and nearby home values.

• Assessing the general condition of the home: the appraiser does not go into as much detail as your home inspection, as they are not looking for specific faults with the property, rather the general condition. The appraiser will calculate the square-footage, take note of the number of bathrooms and bedroom and make note of any obvious safety issues with the home.
• Home Improvements: If the home has recently been renovated this may increase its value. Typically the appraiser will only consider permeant fixtures to the property (including both the inside and outside or property of the home like a garage or backyard pool).
• Nearby home values: the appraiser will review your location for similar homes that have sold recently and perform an analysis of those homes compared to yours. This helps to determine the current fair market value.

Depending on the mortgage you are applying for, there may be specific appraiser requirements that must be followed (for example a Veterans Affair loan (VA) appraisal must be conducted by an appraiser who is certified to perform a VA appraisal).

After the appraiser finishes the inspection of the home, they will finalize their appraisal report and send it to your mortgage lender. You will receive a copy of this report to retain for your personal records. Your lender will use the valuation to finalize your loan.

Home appraisals can affect the selling price and mortgage amount for a home. An appraised value that is less than your purchase price could mean that you have to bring additional cash to close or may need to renegotiate the purchase price with the seller. In some cases, a very low appraisal may force you to walk away from the home. However, if your appraisal comes in higher than your purchase price, you will feel very good about your decision to purchase! Once the appraisal is received your lender can proceed with the loan origination process.

Selecting the right mortgage company and loan officer is the first step toward purchasing a home. The expert, experienced staff at Standard Mortgage (NMLS#: 44912) has been helping people purchase and refinance their homes for over 90 years.