Therefore, the appraiser will most likely know the selling price of a home, but this is not always the case. There are times when we have appraised properties for private sales where both the buyer and seller have refused to provide this information. Unlike the sale price, the appraised value of the home may not be what sellers ask for their home. Lenders will only allow a loan amount based on the value of the home on the appraisal report.
The evaluation process takes an average of seven to 10 days. The appraiser visits the property and spends an hour or two inspecting the interior and exterior of the home, measuring square footage and evaluating the features and fixtures of the home. The appraiser also compares the home to other similar homes recently sold in the neighborhood (also known as comps). After performing the physical inspection and executing the compensations, the appraiser writes an evaluation report.
The amount of time the entire process takes depends on the complexity of the assessment and the evaluator's workload or schedule. As you can imagine, the seller's best bet is to try to price the home for a value that matches the sale price. While you can't change the location of the property, you can do something about other factors that could lower the home appraisal. An appraisal is the best way to estimate the fair market value of your property based on the location, status, and recent sales of similar homes in the surrounding area.
For your information, this weighting step is where appraisers tend to make their appraisals arrive at a price equal to or higher than the contract price. I just wanted to clarify that there is some additional layer here that I think appraisers need to consider because appraisers still have to look for answers in the market. Because appraisers base their valuation on comparable sales, they may struggle to justify a sale price that is higher than that of similar homes sold recently. For decades, one suspicion has been that mortgage brokers and appraisers had an implicit or explicit understanding that appraisals should not be lower than the contract price unless the contract price was too high.
The post-contract valuation was, on average, 4.2% higher than the pre-contract valuation for the same property. If you're a buyer, owner, or seller, you'll want to understand how the appraisal process works and how an appraiser determines the value of a home. If an appraiser is new and lacks experience writing a property appraisal like yours, it could result in a low valuation. Appraisers apply adjustments to all compensation and get a good idea of the value of the home under contract.
This conversation reminds me of a common thread I heard about refinancing appraisals that are different from purchase appraisals in terms of value. However, making sure your home is in top condition and that the appraiser has access to everything, including a list of recent improvements, are some of the things that the seller can manage. In a refinance transaction, an appraisal assures the lender that you are not giving the borrower more money than the home is worth. In other words, on paper it may seem that a house cannot be rehabilitated, but in reality if investors buy those houses and rehabilitate them, appraisers cannot ignore that reality either.
If the appraiser expects a percentage of the home's value to be paid, it may be a sign of an unethical practice, which should be avoided.