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Home Buying

How Much Does a Home Appraisal Cost?

How Much Does a Home Appraisal Cost?

6 Minute Read

Home is where the heart is and, as they say, there’s no place quite like it. A good home is priceless. But how do you know how much those four walls are really worth?

If you’re buying or selling your home, getting an appraisal is an important early step in the process. It’s the official “price stamp” of your home’s value from an independent professional. That last part is important. You don’t want just anyone making a guess about the value of your house.

So how much does an appraisal cost? And why is it important to get one?

Let’s find out.

What Is An Appraisal?

Simply put, a real estate appraisal is an objective look at a property to determine how much it’s worth. It’s done by a licensed professional who calculates the value of the property based on things like its age, location, square footage and upgrades along with recent sales in the area.

Is it in a popular part of town? Check. Is it in a good school district? Check. Does it have a remodeled kitchen or a full basement? Check. All of these things go into the official assessment of how much moola a home might be worth on the open market.

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Real estate agents or websites may be able give you an educated guess about value, but an appraisal is generally required as the official paperwork to prove that a seller doesn’t wildly overprice or underprice a home.

An appraisal is generally required as the official paperwork to prove that a seller doesn’t wildly overprice or underprice a home.

The mortgage company then uses this report to make sure they loan a suitable amount of money to the buyer—and not more or less than the home is actually worth!

How are appraisals different from home inspections?

Good question. Home inspections are about checking the house in detail to see if it’s in good condition from basement to roof. An inspection doesn’t tell you how much the house is worth.

Instead, a home inspection will flag up any issues or damage the seller needs to address before the buyer agrees to close on the deal.

An appraisal at the high level usually paves the path to a later home inspection. And if the inspection goes well, it means a buyer can be confident they’re buying a home with solid value!

What are appraisals used for?

Home appraisals are mainly used by mortgage lenders to approve the loan they’re about to give to someone who wants to buy a house. In fact, it’s a requirement if you want to get a mortgage.

This gives the lender a green light to proceed with your mortgage application because an unbiased source—not a seller or realtor—told them what the house is worth.

Here are some other reasons appraisals are handy:

  • If you want to make improvements or renovations to increase the value of a home, you could have it appraised before and after to see how much it’s worth.

  • If you plan to sell your home, getting an appraisal gives you an accurate value based on current market conditions and recent sales in your neighborhood.

  • An appraisal can also help you figure out how much you should pay in real estate taxes. Without one, you could end up paying more than you need to.

How Much Does An Appraisal Cost?

If you’re getting a single-family home appraised, it’ll cost you about $300–400.(1) You usually pay for it along with the other closing costs when you buy a house.

The cost for an appraisal will be higher if:

The house is large

The bigger the house, the more the appraisal will cost. That’s simply because the appraiser has more to cover and assess.

You’re getting a jumbo loan

A jumbo loan is a mortgage that’s higher than the usual limits from a lender, and it’s usually for a home that’s larger than average or in a highly desirable area. And because they’re lending you more money, the appraisal costs more. Some lenders even ask for two separate appraisals to check a home’s value.

The house is in a unique location

If you’re lucky enough to be in the market for a mansion that overlooks the ocean or sits on a secluded mountaintop with very few neighbors nearby, the appraisal will cost more—partly because there aren’t many similar homes to compare it to.

Why Are Appraisals Important?

Okay, as we’ve mentioned before, appraisals are important because they’re an objective and unbiased assessment of how much a house is worth at the time of the appraisal.

As a buyer, you can use the appraisal to feel good about the house you’re about to buy because you know it’s worth what the seller is asking for it.

As a buyer, you can use the appraisal to feel good about the house you’re about to buy because you know it’s worth what the seller is asking for it.

If the appraisal comes back lower than the seller’s price, the buyer could use it to negotiate a reduction by asking the seller to match the appraisal price. There may even be a contingency in the contract that protects you from buying a home at a higher amount than the appraised value. If not, you may have to meet the seller in the middle with cash—and that’s risky business.

On the flip side, if the appraisal comes back a bit higher than the asking price, the buyer will know they’re buying a house that’s already going up in value. That’ll be great news when it comes to selling it!

When Should You Get An Appraisal?

As a buyer, you need to get an appraisal if you want to get a mortgage. The mortgage company itself will organize the appraisal once the seller accepts your offer and your mortgage is being processed.

An appraisal is also important when you want to sell your home because you’ll learn a realistic price to put on it. And if you want to refinance your home loan at some point, you’ll need to get your house appraised so the mortgage company can see how much it’s worth compared to when you bought it.  

Ready To Get Into The Housing Market?

From appraisals to home inspections and escrow to closing costs, the world of real estate can be complex to navigate! If you’re buying or selling a home, you’ll need trusted experts to help you from the first bid to appraisal to closing day.

Our Endorsed Local Providers (ELPs) are just the folks to do that. They’re very skilled at  communication, customer service and negotiating, and they know what it takes to get a home sold from start to finish.

Find an agent in your area today!