The appraisal process in real estate transactions plays a crucial role in determining the true value of a property. Whether you are a buyer or a seller, understanding the appraisal process can help you navigate the home buying or selling experience more efficiently.

As a buyer, you will be responsible for paying for the appraisal, which typically costs between $314 and $423. Your main concern is that the appraisal accurately reflects the true value of the home you are looking to purchase. On the other hand, as a seller, you also want an accurate valuation that is not understated.

The appraiser, who is an independent third party in the homebuying process, is tasked with providing the most accurate valuation of the property for the lender. The appraisal process varies depending on the type of loan being sought, whether it is a conventional loan, FHA loan, USDA loan, or VA loan.

During the on-site visit, which typically takes 20 minutes to a couple of hours, the appraiser will assess the condition of the property and take photos to document its features. The appraiser will then conduct research to find comparable properties in the area to determine the value of the home being appraised.

It’s important to note that an appraisal is not the same as a home inspection. While an appraisal determines value, an inspection focuses on the condition of the property.

During the appraisal process, certain red flags, known as “subject to” flags, may be identified that require further inspection or correction before the loan can be approved. These flags could include issues like termites, mold, roof damage, or environmental hazards.

Different loan types, such as FHA, USDA, and VA loans, have specific appraisal requirements that appraisers must follow. For example, VA loans require appraisers to check for specific items like heating systems, sewer systems, and foundation security.

Understanding the appraisal process and its requirements can help sellers make necessary improvements to maximize the value of their home and help buyers ensure they are getting a fair deal. Ultimately, getting an appraisal is a critical step in the homebuying process to ensure that the property’s value aligns with the loan amount.