What Exactly Are Appraisals and How Do they Work?

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Today we are excited to talk to you all about appraisals. We’ll go over what they are, how they work, and how they affect the purchase of your home.

Every time you write a contract, there will be a clause in there saying that a home has to appraise in order for the sale to go through. These aren’t required with every type of financing, but definitely are for FHA and VA loans. 

If the home doesn’t appraise out to at least the value it was purchased for, you have the option to void the contract and/or negotiate the price down. An important thing to remember about appraisals is that they are one person’s opinion on the value.

There is math and there are formulas involved in coming up with an appraised value, but there is some art to it as well. By using comparable homes, an appraiser will determine whether your house is priced fairly. If a new house sells the next day and it’s a more comparable home to yours than another one was, your home will then probably appraise a little differently. 

Even though you’ve had a home inspection, the appraisers have a responsibility to look for certain things and areas where improvements can be made. Sometimes you might get a conditional appraisal that says your home will appraise for x amount if you fix a certain problem. 

Hopefully this has been helpful to you. The appraisal typically takes about 48 hours to come back after it has been completed, and the lender will let you know when it comes in.

If you have any questions for us about appraisals, feel free to give us a call or send us an email. We can’t wait to hear from you!