Purchasing a home is often a lengthy journey. Once your offer is accepted, several tasks remain before you can settle into your new home, and one of those is a home appraisal. Appraisals play a vital role in the home buying process by ensuring both the buyer and the mortgage lender have confidence in the financial investment being made.

But what exactly is involved in a home appraisal, and how long does the process take? Let’s break down the essentials of appraisals and examine the key factors that might influence your ability to continue moving forward in the process.

What Exactly Is a Home Appraisal?

In the real estate industry, a home appraisal serves to determine the fair market value of a property, ensuring that the buyer pays an appropriate price. Unlike a detailed home inspection, where the inspector meticulously searches for potential defects, a real estate appraiser focuses primarily on the overall value and general condition of the home.

During the appraisal, the appraiser assesses the property’s overall state, considers any upgrades or improvements that have been made, and conducts market research on comparable properties in the area. This information is then used to determine the final appraised value, which is documented in an appraisal report and forwarded to the mortgage lender.

For home buyers who have included an appraisal contingency in their offer, a lower appraisal value than the listing price opens the door for renegotiation. If negotiations don’t work out, the buyer has the option to back out of the sale without incurring a financial loss.

How Much Time Does a Home Appraisal Require?

Typically, the completion of a home appraisal can range from a few days to a few weeks, depending on the specific property being evaluated and its location. Various factors, such as the property’s complexity or the appraiser’s availability, may contribute to delays in the process.

This procedure is comparable to a refinancing appraisal, with one notable difference: homeowners refinancing their property have the option to be present during the appraisal, whereas home buyers do not have this opportunity.

What’s The Timeline for a Home Appraisal?

To provide insight into how long the appraisal process may take, here’s a typical timeline for a home appraisal:

• Ordering the appraisal: Once the offer is accepted, an appraisal is usually arranged within 48 hours. 
• On-site property appraisal: The duration of the appraisal depends on both the property and the appraiser, ranging from 30 minutes to several hours. 
• Buyer receives the appraisal report: The complete appraisal report is generally available within 6 to 20 days from the start of the appraisal process. 

At What Point Is An Appraisal Requested During The Loan Process?

After your offer is approved, your mortgage lender will initiate the appraisal request. The home appraiser is an independent third party (neither you nor the lender), often employed by an appraisal management company (AMC). Once the appraisal is initiated, the appraiser generally reaches out within 48 hours to arrange a time to inspect the property.

What Does an Appraiser Assess?

Typically, an on-site appraisal may take anywhere from 30 minutes to a few hours. It’s important to note that this duration might vary with a drive-by appraisal.

When a property is being evaluated by a real estate appraiser, they take into account several key aspects, including:

• Exterior condition: The appraiser assesses the overall quality of the home’s structure, including construction, roofing, and foundation, while checking for any visible damage or defects. Additionally, they consider the home’s location and surrounding neighborhood in the valuation process.
  
• Interior quality: The appraiser inspects the condition of the home’s interior, focusing on elements such as total square footage, the number of rooms, layout, and structural soundness. They also confirm that the home includes essential features like a furnace (though they won’t test it—this is reserved for a home inspection).
  
• Comparable properties (comps): A critical element of the appraisal report involves the appraiser researching similar properties in the neighborhood, often known as comparable homes (comps), which they use to help establish the property’s current market value.

When Will the Buyer Receive the Appraisal Report?

Depending on various elements, home buyers can anticipate getting their appraisal report anywhere between 6 and 20 days from the initiation of the appraisal process.

Once the real estate appraiser has gathered all the necessary details about the property, this information is compiled into an appraisal report, which serves as an in-depth analysis of the property and provides the mortgage lender with an estimated value of the home.

The amount of time it takes to complete the appraisal report may vary based on factors such as:

• The size or complexity of the property being appraised
• The appraiser’s current workload or schedule
• The timing of when the mortgage lender requested the appraisal along with assessing the home’s condition, the appraisal report will also include a comprehensive market analysis.

What Happens After the Appraisal?

Once you and your lender have reviewed the appraisal report, the next steps will be determined by the findings within the report.

If the appraisal comes in lower than the agreed-upon sales price, meaning the property is valued beneath what’s been offered, the transaction might face some challenges. The mortgage underwriter will most likely only approve a loan based on the appraised value. You could attempt to negotiate with the seller to reduce their price, but if they decline, you may need to either cover the difference yourself or withdraw from the purchase. Without an appraisal contingency, backing out could result in the loss of your earnest money deposit.

If the appraisal aligns with or exceeds the sales price, you can move forward with closing, potentially securing some extra equity in the process.

Conclusion

Understanding the home appraisal process and its timeline is essential for home buyers, as it directly influences the final steps of securing a mortgage and completing the purchase. The duration of the appraisal can vary, typically spanning a few days to a few weeks, depending on the property’s complexity and the appraiser’s workload. Buyers should remain patient during this process, as a thorough and accurate appraisal protects both the buyer and the lender, ensuring that the home’s value aligns with the agreed-upon price.

While appraisals might uncover issues with the property’s value, they also provide opportunities for renegotiation, allowing buyers to address any discrepancies. If the appraisal meets or exceeds the sales price, it offers peace of mind and ensures that buyers are not overpaying for their new home. By staying informed and proactive, you can navigate this critical step smoothly and confidently proceed toward closing on your dream property.

FAQs:

What is the purpose of a home appraisal? 

A home appraisal determines the fair market value of a property, ensuring the buyer pays a reasonable price and the lender is protected in the event of default.

How long does a home appraisal take? 

The appraisal process typically takes anywhere from 6 to 20 days, from scheduling the appraisal to receiving the final report. The on-site evaluation usually lasts between 30 minutes and several hours, depending on the property.

What factors influence the time required for an appraisal? 

The appraisal timeline can be affected by factors such as the property’s size and complexity, the appraiser’s schedule, and market conditions in the area.

Can a buyer be present during the appraisal? 

Homebuyers cannot attend the appraisal in most cases, as it is an independent evaluation. However, homeowners refinancing their property are often allowed to be present.

What happens if the appraisal is lower than the agreed-upon price? 

If the appraisal comes in lower than the sales price, buyers may need to renegotiate the purchase price or cover the difference themselves. In some cases, buyers can back out of the sale if an appraisal contingency was included.

How does an appraiser determine the property’s value? 

An appraiser assesses factors such as the property’s condition, location, upgrades, and comparable properties in the area to determine its market value.

When is an appraisal report required during the home-buying process? 

An appraisal is usually requested by the mortgage lender after the buyer’s offer has been accepted, typically occurring early in the loan process to ensure the property’s value aligns with the loan amount.

What should I do after receiving the appraisal report? 

After reviewing the appraisal report with your lender, you can move forward with the purchase if the appraisal matches or exceeds the sales price. If the value is lower, negotiations or other actions may be necessary to finalize the sale.