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Guide to Residential Home Appraisals for Buyers

Before you can get a mortgage approved, you will need to have the property appraised. A home appraisal is an assessment of the market value of a property. Don’t confuse the appraisal process with the inspection process.  An inspection is done to reveal potential structural and conditional problems with the property.  The results of an inspection, such as a leaking roof, will impact the appraisal.  However, an appraisal is much more detailed and considers numerous factors to determine the value of the property.


What do Home Appraisers Look At?

Home appraisers are specifically trained to assess the value of a property based on numerous factors, such as:

  • Building structure, such as the foundation, siding, and roof.  The appraiser will want to see the condition of the structure as well as the quality of materials
  • Interior elements of the home, such as the flooring, windows, doors, appliances, lighting, plumbing, and so forth.  Again, the appraiser is looking at the quality and condition of the elements.  The appraiser is also considering what is and isn’t included. For example, the addition of expensive hard-wood molding can add value to the home.
  • Amenities, such as air conditioning, security systems, pools, and verandas can add value to the home.
  • Built-in appliances, such as sinks, bathtubs, and lighting fixtures will be assessed.  Any receipts or documentation about amenities and home remodeling should be given to the appraiser.
  • Land, such as the front and back yard, will be assessed by the appraiser.  In general, the larger the land, the more the property will be valued.
  • Real estate value in the area


Who is the Home Appraiser?

Appraisers are state licensed and must uphold strict standards regarding ethics of determining home value.  They are required to be completely neutral and not let their personal opinion or the opinions of others influence their appraisal.  In most cases, the appraiser is picked by the mortgage lender.  Borrowers may be able to choose their own appraiser but the appraiser’s assessment will likely need to be reviewed before it is accepted.

Who Pays for the Home Appraisal?

The borrower is generally responsible for paying for the home appraisal.  The costs are usually included during the loan application.


What is the Difference between CMA and Appraisal?

CMA stands for Competitive Market Analysis.  It is used by real estate agents to set the asking price of a property.  An experienced real estate agent will usually be able to come close to the appraisal amount.  However, a CMA cannot be used in place of an appraisal. An appraisal considers much more than the CMA when determining the property value.  A lender will not accept a CMA over an appraisal to approve a loan. Generally, a property’s asking price is set at about 5-10% more than the CMA in order to allow leeway for negotiation.  An appraisal can greatly affect the negotiation process or even cause a reduction in asking price.