You are in the final process of closing on a house! Well done! Before the deal can go through, the mortgage lender will request a home appraisal report to determine the property’s true value. We have a comprehensive home appraisal checklist to help you prepare for this process.
Key Takeaways
- Home appraisal, the valuation process of a home, is generally ordered by mortgage lenders before approving a loan
- Home appraisal is requested when sellers accept the buyer’s offer on the property.
- Average cost of home appraisal across the US ranges from $313 to $421.
- Appraisal checklists by loan types: 1. Conventional Loan Appraisal Checklist 2. USDA and FHA Home Appraisal Checklist 3. VA Home Appraisal Checklist
- Appraisers deduct $500 from the appraised value for each flaw they find.
What is Home Appraisal?
A home appraisal is the process of evaluating a property with the intention of determining its actual value. An unbiased third-party appraiser will consider different aspects of a home and calculate how much they will affect its value.
The appraiser checklist can differ based on the loan type the buyer chooses. These appraisals often depend on what the lender wants to know. Keep in mind that appraisals are different from home inspections. Their sole purpose is to determine the value of the property.
If you want a comprehensive report on the property’s flaws and prospective repairs, you will need a comprehensive home inspection.
Home Appraisal Process
The process differs from one appraiser to other, but most will follow these basic steps:
- Researching the value
- Scheduling appraisal with the homeowner
- Visiting property to carry out the appraisal
- Preparing a report
» Home Appraisal: Look at the home appraisal process and everything you need to know about a home appraisal.
When to Get a Home Appraisal?
The lender will request a home appraisal after the seller accepts the buyer’s offer. You may also need to get one if you’re refinancing your home. A streamlined refinance from FHA is an exception to this rule and doesn’t require an appraisal.
A home appraisal can take less than an hour if the property is small. It can take a few hours for large properties, especially if the expert has an expansive checklist for house appraisal from the lender.
What Does Home Appraisal Consist Of?
An appraiser’s checklist can include items like location, neighborhood, condition of the property, and market value of other homes in the area. They will conduct a comprehensive walk-through of the property to see if there are any notable flaws that may impact the value of the property.
An appraiser will also check three or more most recently sold properties in the neighborhood to get the average market value of the area.
» Home Appraisers: We explain what an appraiser is and what they do during an appraisal.
Home Appraisal Checklist
The HUD home appraisal checklist will differ slightly from the bank home appraisal checklist. Some points may overlap but different lenders have different priorities and that reflects on what they want from an assessment.
1. Conventional Loan Appraisal Checklist
If you are applying for a mortgage from a private lender, you are applying for a conventional loan. Private lenders have a set of requirements and will want to look at the points mentioned below during an appraisal.
- Home condition
- Size of the property
- Condition of appliances
- Landscaping quality
- Roofing and foundation
- Number of rooms, bathrooms, bedrooms, closets, and windows
- Lighting and plumbing quality
- Number of fireplaces
- Swimming pool condition
- Sprinkler system condition
- Basement condition and quality
- Finishing condition and quality (flooring, countertops, etc)
- Upgrades and remodeling details
2. USDA and FHA Home Appraisal Checklist
USDA loans are guaranteed by the US Department of Agriculture and are designed for moderate-to-low-income applicants buying a home in a rural area. FDA loans are backed by the Federal Government to help people who can’t get loans from private lenders. Both organizations have unique appraisal checklists that house appraisers need to look at before they approve a loan. In addition to the points mentioned in the conventional loan checklist, USDA and FHA checklists include:
- Drainage moves away from home
- Handrails are present
- Foundation is strong and substantial
- Roof has been without leaks for at least 2 years
- Lead-based paint analysis for homes built before 1978
- Defective paint
- Termites (just to check for evidence of termites)
- Damage to sidewalk or driveway
- Ventilation and mechanical systems function
3. VA Appraisal Checklist
VA loans are backed by the Department of Veteran Affairs and are only given to military veterans. They also have a specific set of requirements before they approve a loan. The appraiser must be licensed by VA and will be selected by the VA. Appraisal will be reviewed by the lender’s staff appraiser or VA appraiser before the reviewer issues a Notice of Value. In addition to the points mentioned in the conventional loan checklist, VA checklist includes:
- The NOV lists home value, repairs needed
- Heating system is capable of warming the interior to 50° F
- A structurally sound roof that can last for a “reasonable amount of time”
- Functioning sewer system
- Functioning water heater
- Drinking water is clean
- Secure foundation
- Working utilities
- Pest inspection
- Peeling or chipping paint
- Missing handrails
- Broken or damaged windows
- Rotting wood
- Water stains
- Absence of exposed wiring and noticeable electrical issues
4. Appraisal For Refinance Checklist
Most lenders will require a home appraisal before they approve of a refinance application as well. The checklist is similar to the list for conventional loans unless you have gone through a streamlined refinance, which doesn’t require an appraisal. The appraiser will assess:
- Home condition
- Size of the property
- Condition of appliances
- Landscaping quality
- Roofing and foundation
- Number of rooms, bathrooms, bedrooms, closets, and windows
- Lighting and plumbing quality
- Number of fireplaces
- Swimming pool condition
- Sprinkler system condition
- Basement condition and quality
- Finishing condition and quality (flooring, countertops, etc)
- Upgrades and remodeling details
Consult this list to prepare for an assessment before your refinance loan goes through.
5. Appraisal Checklist Template
Once the appraisal is done, the appraiser will prepare a comprehensive report and submit it to the home buyer, lender, or seller. If you have an appraisal checklist template on hand, you can be prepared for the assessment and avoid a low valuation. Go through the checklist carefully and do a walkthrough of your home to see if anything stands out.
Why is Home Appraisal Important?
1. For Buyer
As a buyer, you will want to get an appraisal to ensure you don’t pay more than the home’s actual value. Some properties are deliberately priced higher because the seller anticipates they will have to compromise during the negotiations.
2. For Seller
Sellers should get an appraisal to ensure their property isn’t undervalued. Some homeowners lose thousands of dollars because they’re not adequately prepared for a professional evaluation. You can prepare a home appraisal checklist for sellers from the items mentioned above to ensure your property is in good shape.
3. For Mortgage Lenders
Mortgage lenders want to minimize risk on their loans. They request a thorough home appraisal to ensure the mortgage amount is equal to or lower than the home’s market value.
» Best Mortgage Lenders: Need a mortgage lender? We have some of the best options in the US for you.
Average Cost of Home Appraisal
A home appraisal can cost between $313 and $421, with the national average being $352. The prices vary depending on the type of loan you apply for. Appraisal costs for government-backed mortgages like FHA or VA loans are slightly higher, ranging from $400 to $500.
There are several factors that influence home appraisal costs, including the size and complexity of the property. For example, a multi-family home appraisal can cost up to $1,000, while a small apartment can cost around $350 to $400.
How to Prepare for Home Appraisal?
Preparing for an assessment can help sellers save a lot of money. By preparing a comprehensive home checklist based on the points mentioned in this post, you can identify key issues and fix them before the house appraiser arrives at your property. We also recommend deep cleaning your property beforehand.
We have a detailed guide on how to prepare for home appraisals that you can consult if you want to know more.
The $500 Rule
Home appraisers usually value a home in $500 increments. Any flaw they spot in the property can potentially deduct $500 or more from the appraised value. This can quickly add up to several thousand dollars depending on the condition of your home. It is best to fix all small issues beforehand, especially if their repairs will cost less than $500.
How to Deal with a Low Appraisal
Sometimes appraisers will value your property lower than its actual worth, which could mean a loss of thousands of dollars in some cases. In such cases, you have three options:
- Negotiate a better purchase price with the existing buyer.
- Challenge the home appraisal report.
- Cancel the transaction and look for a new buyer.
» What Hurts a Home Appraisal: Read about things to avoid to ensure your home isn’t undervalued.
Conclusion
A complete appraisal inspection checklist can help sellers, buyers, and mortgage lenders. By hiring a reputable home appraiser, all parties can ensure the deal is fair and the property’s value is accurate. Being aware of what’s on a home evaluation checklist can also help homeowners fix the issues before they can impact the value of the property.
Frequently Asked Questions
1. What's included in a VA appraisal checklist?
The appraiser appointed by the VA will check all essential systems, appliances, and structural elements of your home. Look at our full VA appraisal checklist to know more.
2. How much does home appraisal cost?
Home appraisal costs anywhere between $400-$500. The costs depend on the size and location of the property as well as the relative complexity of the home appraisal checklist.
3. How long does home appraisal take?
Home appraisal can take anywhere from 20 minutes to a couple hours depending on the size of the property.
4. Do I need a home appraisal?
Mortgage lenders require a home appraisal before they approve a loan. While it is possible to avoid home appraisals in some cases, we don't recommend it. An evaluation can help ensure the property is valued accurately.
Helpful Resources for Sellers
» Closing Costs for Seller: Selling a house? Look at the closing costs for sellers.
» Sellers Disclosure: Sellers need to disclose some important details about their property. Find out what they are.
Helpful Resources for Buyers
» How Much Are Closing Costs for Buyer: Look at the different closing costs a buyer has to pay during closing to understand your cost burden.
» How Much is Title Insurance: Buyers need to pay for title insurance in most states. Learn more about title insurance.
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