Home Appraisal Cost
How much does it cost to hire a home appraiser?
Purchasing any type of real estate usually comes with the need for a professional appraisal to be done. Both the seller and the buyer may have appraisals, and the information on them might be somewhat different. For the purpose of this discussion we will consider the costs of hiring a home appraiser when you are the intended buyer of the property in question.
Why is an appraisal even necessary? Isn't a formal inspection enough? No, an inspection may indicate some issues with the structure or systems within the building, but it never gives a "fair market price" for the property, nor does it put the home into the proper context of the surrounding neighborhood. Only a qualified home appraiser will understand the many different elements that combine to make a home worth more or less than the asking price.
According to MortgageNewsDaily.com, the national average cost for an appraisal by a licensed professional is between $300 and $400 and should require roughly two hours of inspection time to complete. The website also points out that the intended buyer of the property should always demand a copy of the appraisal from the professional who drafted it. This is to help the buyer track the home appreciation that occurs after they purchase the property and make improvements.
A common appraisal must include:
- A detailed look at the property and a comparison of it against three similar properties in the area;
- An assessment of the overall real estate market in the area or region;
- Accurate statements about any issues that will decrease the property value - such as on-street parking only;
- Notes about flaws in the structure that will drive the pricing down further - such as a cracked foundation wall;
- The appraiser's personal estimate on the average anticipated time for the property to sell; and
- A statement about the type of area in which the home is located.
Additional considerations and costs
A good appraisal will sound and be neutral and objective, but it will also point out the ways in which the property can be negotiated to a lower cost. For example, the appraisal that comes in dramatically lower than the asking price is going to clearly indicate exactly why it is so, and the potential buyer can use these points when offering a more reasonable amount for the home.
All appraisers are licensed by the states in which they practice, and the best will indicate that they work in conjunction with the Code of Professional Appraisal Practice of the Appraisal Institute. If the appraisal is worth the cost it is going to be a multi-page document that is organized clearly and which gives the information that the lender requires within the first two pages. After that it should be broken down into the following categories:
- Identifying the property - with information about address, map references, taxes, and assessments made by the town or city;
- Describing the neighborhood - this is looks closely at local and county factors and might even include notations about economic issues, local attractions, and more. This section also includes a detailed assessment of the site including the size of the lot, the shape, landscaping, utilities and amenities, condition of streets and sidewalks, and if the home is in the flood zone;
- Improvements - this is usually done using a checklist and gives a more detailed description of the property than in the first section, and reveals the conditions of each area. For example, is the basement dry? Does it have a porch? etc;
- Interior features are also looked at in this section and includes everything from insulation, HVAC, condition of floors and walls, etc.;
- The final section will mirror the first two pages and look at time to sell and assessed value.