Getting a home appraisal is an integral part of selling a house, especially if the buyer is getting a mortgage. Appraisals aren’t just for home sales. They may also be performed for a variety of other circumstances related to getting a new loan, refinancing your existing mortgage, transferring ownership of a property, or tax or insurance purposes.
Knowing what appraisals consist of can help homeowners justify and understand the cost. If a home appraisal is required for refinancing or selling a house, you at least want to know what you’re paying for. This article breaks down the services rendered by a home appraiser and the amount you can expect to be charged to have one performed.
What is a home appraisal?
Pretty much all financial processes related to mortgaging or financing homes involve a step called home appraisal. A home appraisal consists of a few services performed by a licensed appraiser, with the intent of finding the value of a property. The appraiser will generally start by doing a visual inspection of the property in question so the house’s unique characteristics and conditions can be taken into account. Then, the appraiser will perform an analysis of the market in your area. They compare your home to the selling prices of other recently sold properties. They compile this information into a detailed report, which explains their findings. There are three standard valuation methods appraisers use, the sales comparison approach, the cost approach, and the income capitalization approach.
An appraiser is trained in assessing the quality of the house to determine its value. They are experts in their field who have been trained and insured, as well as licensed for the job, which is why their services can seem expensive.
The base price of a home appraisal
A home appraisal consists of some services that we mentioned that will always be the same. However, the size of your house, the accessibility of the attic or basement, as well as the accessibility of the outside can affect the time it takes the appraiser to make their assessment. This affects the cost.
In general, however, a single-family home can be appraised for between $300 and $450. In areas where labor costs are higher such as expensive cities, this number can increase to a range of $500 to $800. Knowing the cost of labor in your area or the standards set by local home appraisers concerning the property’s accessibility can help a homeowner better prepare to face their appraisal fees.
Who pays for a home appraisal?
In a situation with a buyer and a seller, the buyer usually pays for the home appraisal. The appraisal cost is generally included with the buyer’s other closing costs. However, the seller will still have some responsibility as they’re typically responsible for coordinating access to the home with the appraiser. Occasionally, a seller may agree to pay for the appraisal, especially if the market conditions favor buyers, but this is the exception, not the rule.
Now let’s consider the case of refinancing a mortgage, where the homeowner is the borrower, and the bank is the lender. The borrower pays for the appraisal, which is the first step towards their goal of refinancing the house. The bank chooses the appraiser without the borrower’s input, but in most cases, the homeowner will be responsible for coordinating with the appraiser. While the appraisal cost may be a nuisance, it’s a small price to pay compared to the thousands or tens of thousands of dollars you can save by refinancing.
What influences the appraisal cost?
Most appraisals fall within the $300-450 or $500-800 ranges we mentioned earlier, although in some cases, the cost of the appraisal can be higher. The biggest factor will typically be labor costs in one area versus another, in rural vs. city properties. For example, the cost of an appraisal in NYC will be more than one in rural Pennsylvania. However, other factors can influence the appraisal cost as well.
The size of the house in question is a significant factor, as well as its accessibility and unique features. A home with a big footprint and lots of square footage will increase the time required to complete the appraisal, which increases the cost. If there are complicated roof spaces, inaccessible basements, attics, or damage to the house, it can also make the home appraisal take longer.
Unique room setups, ample square footage, and accessibility can change the appraisal cost, but most home appraisals will fit into the above ranges based on the property area.
How accessibility plays a role
We want to clarify how accessibility plays a role in the cost of a home appraisal because it can be a huge factor in certain areas or even certain times of the year.
In northern areas, snow can impact a property’s accessibility and prolong the appraisal process, raising its cost. This increase is even more pronounced on large properties with multiple buildings, complicated yard designs, and other complex structures.
Basements and attics can be difficult to appraise as well, depending on accessibility. They can prolong the home appraisal process. Even damage to the house or clutter can impact the appraisal.
A home appraisal is a significant part of the home buying process. It’s also integral to refinancing an existing mortgage. Home appraisers are licensed and trained to assess the value of homes. That training comes with a cost, which isn’t always easy to predict.
However, the range we specified of $300 - $450 for single-family homes in typical suburban areas and $500 - $800 for denser city areas can be influenced by other factors. These factors include damage to the house, complicated rooms, and ample square footage. Accessibility can also play a significant role, including weather conditions that impede the appraisal process.
It’s vital to make the property as accessible as possible to lower the ultimate appraisal cost.