Everything You Should Know About Appraisals


Determining a Home's Value Is a Critical Step in Every Real Estate Transaction.

Often lost in the process of buying and selling (or refinancing) real estate is the appraisal. As a lender-driven task, the assessment of a home's value is one of the few steps out of the hands of the transacting parties. However, a lot is riding on the outcome, and its importance cannot be overstated. 
An appraisal often stands as the final hurdle to a successful real estate transaction. Let's explore what an appraisal is and some key points both a buyer and seller should know about the process.

What Is an Appraisal?

In its simplest terms, an appraisal determines the basic value of a home. Ordered by a lender and paid for by the borrower, appraisals are a near-universal step in the purchase and sale of real estate. The valuations are also employed during refinances, though not nearly as often as a sale. All-cash transactions typically don't require an appraisal.
The appraisal helps a lender determine if a home is worth the asking or contract price and serves as cover for the lender should a buyer default on their home loan. If a bank loans more money than a home is worth, they would be unable to recoup their funds in the case of a foreclosure-and-sale scenario.

What Does an Appraisal Involve?

On average, an appraisal costs approximately $350, but they can be as low as $250 and run as high as $750 or more. Lenders maintain a trusted roster of appraisers to help determine a home's value. 
The process itself takes no more than 30 to 45 minutes on-site, with additional work done by the appraiser away from the subject property. Items they review during the appraisal process include:
  • Property size, including square footage and number of bedrooms and bathrooms
  • Overall condition of the house, including its age and construction (and materials used)
  • Additional upgrades or repairs made to the property (or a determination if future repairs might be necessary)
  • Specific home features, including HVAC, extra storage, safety systems
  • Nearby amenities, specifically as it relates to location—good schools, popular attractions like shopping or dining, parks, lakes, or access to areas like trails, natural preserves, or beaches
Appraisers also analyze a home's immediate neighborhood and properties comparable to the house being appraised. This provides support for their finding on the subject property. Typically, an appraisal report will include three to five comps with the appraiser performing a visual exterior inspection of each and reviewing prior sales activity. 
A distressed community, be it through physical conditions (read: poorly kept homes and yards), or one with high foreclosure rates can negatively impact a subject property's appraised value. A residence in an area near great schools and amenities will appraise higher.

What Happens if an Appraisal Is Low?

Nothing can change the dynamics of a home purchase faster than a low appraisal. For a buyer, it could mean an opportunity to negotiate a lower sales price. For the seller, it means potentially meeting those demands, or for one who's unwilling to move on the asking price, a deal falling through.
A seller can ensure a favorable appraisal with the following: 

  • High-value upgrades throughout, such as in the kitchen and bathrooms 
  • Maintaining a detailed, ongoing list of repairs and improvements 
  • Touching up a home with fresh paint, new hardware, and staging during the listing process
  • Sprucing up and maintaining the home's curb appeal
  • Completing your own due diligence on comps and neighborhood and area amenities (to counter any unfavorable appraisals)
Ultimately, whether you're buying, selling, or refinancing, understanding the process that measures a home's value ensures that all of your future real estate transactions are successful. 

Ready to sell your current home or in the market to buy and make your next major move? Contact Prema Subramaniam today and let her be your guide to East Bay luxury homes in Danville, Dublin, and Fremont, California.


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Prema understands what it is like to stand in her client’s shoes. Buying and selling houses of her own, has afforded Prema a sensitivity towards her client’s journey. Meeting new people and helping clients find the right house to call home is her passion.
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