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My House is Being Appraised. What Can I Anticipate?

By Charles Hopkins Published 04/21/2006 | Real Estate
Your realtor or lender told you to plan on getting a call from the appraiser. Theyd need to set up an appointment when they could come over and appraise your home. Dont panic. This isnt a final exam and you dont need to dread this visit. She (or he) will be there to determine the value of your home, not to look at or in your stuff. They will be looking in all rooms on all levels as well as your outside property. They will measure boundaries and take photographs. Appraisers have seen everything so you need not scurry around tossing things in closets and under the beds as you would if your in-laws were coming over.

Whether youre selling your home or refinancing, the process is the same (in most cases). The appraisers job is to determine market value of your home so that your lender knows the home is valued at or above the amount of money you are borrowing. An appraisal is basically an opinion of value, an estimate of worth. Its not entirely a subjective process. The FNMA, Federal National Mortgage Association sets up the guidelines and assigns values to certain assets of your home to ensure a fair sale.

The value of a residential home is estimated by comparing the property with similar properties that have been sold recently. This is commonly referred to as Comps. We need to look at comps. They start by looking at your neighborhood to find comparable sales or properties in similar neighborhoods that share similar characteristics of lifestyles, income level of residents, surroundings, average age and home values. If your home is a 3 bedroom ranch with 1.5 bathrooms, attached garage situation on acre of land, the appraiser will try to find a similar property in a nearby neighborhood or same school district. They will need to find three or more homes that recently sold homes with similar characteristics for a valid appraisal.

Once they find the comps, some adjustments will need to be made. The other homes likely had some features yours didnt, or vice versa. The comparable properties are adjusted (added onto or subtracted). By doing it this way, your house reveals more value when compared to a comparable house with lacking items (such as no fireplace or central air).

There are basically four phases the appraiser will use in determining market value for your home. They start by listing and evaluating home value data from your property and potential comps. Then they need to go through and determine which items are comparable. Do their adjustments, and rework the figures to your property.

They also have assigned values on areas to use when finding comparable properties. The first area they look at is similar neighborhood. Then they look at living space, numbers of rooms, and sales within the last four months. There are a number of other factors they consider, but it is very methodical and universal.

You can plan on spending 120 to 350 for a qualified appraiser. Often your lender will have a particular company they generally work with. If you would prefer a particular appraiser or appraisal company, just let your lender know that you want it done through that particular service.

Relax, dont worry. Selling and refinancing a home can be nerve-racking enough. Dont stress over the appraisers visit. You cant schmooze them into higher values and theyre not going to trash your appraisal because they didnt care for your choice in wallpaper!