The lady who just got engaged and is getting ready for her wedding, among other things, would, first of all, hit the bridal shop with her friends to check as many gowns as possible to determine which one fits her the most. Similarly, a groom-to-be also goes to the shop with his friends to test out the suits before finally purchasing one. This act of “checking” and “testing” is known as “appraisal.” Away from the bride and groom’s appraisal of outfits, there is also such a thing as a home appraisal in the house-buying process, which we will be discussing later on.
Appraisals are more important in real estate for various reasons, the most important of which is that they provide both the buyer and the mortgage lender with confidence in their financial investment. If you’re into real estate with the intention of buying a house, find out in this post how long an appraisal takes for new construction as well as how long an appraisal takes to get back or refinance once ordered.
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Understanding Home Appraisal
A home or property appraisal is an impartial evaluation of a property’s worth, sometimes known as its fair market value. As a condition of their mortgage financing, most buyers must have an appraisal performed by a licensed appraiser as part of the house-buying process.
Regardless of whether you and the seller agree on a price, an appraisal report is prepared by a licensed third-party appraiser to determine the value of the home. The mortgage lenders typically order the appraisals to determine how much they are willing to lend, but sellers will sometimes have an appraisal done prior to listing the house and then price the property accordingly.
The buyer typically pays for an appraisal required by the lender, which costs between $400 and $500 on average, though it can cost a lot more, especially when the home is located in a rural area, which will require a larger trip fee.
How Long Does an Appraisal Take When Buying a House?
A home appraisal in real estate normally takes two to seven days to complete. To complete the appraisal process, the mortgage lender must first order and schedule the appraisal, followed by data collection regarding the residence. Finally, in order to finalize the appraisal report, the appraiser must review the data.
Each phase of a home appraisal takes the following time:
#1. Scheduling an Inspection
Before scheduling an inspection, an appraisal is ordered from a third-party licensed specialist by your lender. An appraiser can schedule a house walkthrough for up to 48 hours.
#2. Appraisal Walkthrough
The appraiser will visit your home and do a walkthrough. The home walkthrough might take anything from 30 minutes to 3 hours, depending on the size and condition of the home.
#3. Comparable House Review
The appraiser will then review comparable homes, which will take 10 to 30 minutes. If the appraiser uses tools to swiftly discover comparable homes, this phase will be completed quickly.
#4. Receiving the Appraisal Report
It takes 2 to 10 days to compile the information into a report, depending on how many other homes the appraiser is reviewing. A typical single-family home appraisal report is about 10 pages long.
Can Appraisal Take Longer?
Under certain conditions, appraisals may take longer than the estimated time frame. For example, if the house is a high-end or specialty property, you may have to wait longer for a trained appraiser to analyze it.
What Variable Does an Appraiser Use When Determining a Home’s Value?
The appraiser normally considers a combination of external elements, internal considerations, and comparable sales when evaluating the fair market value of a property. Here are a few examples of each to help you understand how a home appraisal works when buying a house.
#1. External Variables
- Location of the property (neighborhood, quality of nearby schools)
- Property situation
- Lot Dimensions
- structural stability (roof, foundation)
- Gutters and siding
- Construction quality
- Porch/patio amenities
#2. Internal Variables
- Square footage
- Functional layout
- Number and size of bedrooms, bathrooms, and kitchens
- Included utilities
- Interior condition
- Structural integrity
- Code compliance
- Amenities
- Heating/central air
- Health and safety accouterments
- Appliances
#3. Sales Comparable
After gathering all of that information, the appraiser will compare your property to other comparable properties that have recently sold in your region. These are often residence sales transaction of within a quarter- or half-mile of yours in the recent months.
In this case, the purchase price of the other properties will be used to help influence your evaluation estimate. For example, if your property is roughly the same size and layout as another home that sold in your neighborhood a few months earlier, but in much better shape, you will almost certainly be assigned a higher value.
How Long Does an Appraisal Take For a New Construction
The appraisal procedure usually takes seven to ten days once ordered by the appraiser. If the appraiser is welcomed to the home, he or she measures the square footage, which is taken into account, in addition to analyzing the home’s condition and characteristics. An appraisal of an existing home normally creates minimal issues for mortgage lenders because there are comparable homes nearby. On the other hand, the appraisal of a new construction home can pose lenders’ complications because comparable properties may not exist. These complications can make the appraisal of a new construction take up to two-four weeks.
The heart of a solid appraisal, like non-construction appraisals, will be found inside the grid of comparable properties recently sold, preferably within the last 3-6 months. Compounds should be comparable in terms of size, location, age, design, and basic amenities. The standard procedure in residential property appraisal is to encompass the property by describing properties above and below in total worth. Then make changes toward the middle to provide the most complete picture and assure true comparison.
How Are New Construction Properties Appraised?
Although not all lenders require all three components to be completed, each evaluation will have Cost Approach, Sales Approach, and Income Approach components.
Appraisers typically employ the cost approach when estimating the value of newly constructed homes. The cost technique combines an estimated land value for a planned residence with the expenses of replicating and modifying it to another model.
Regardless of the method employed, an appraisal must contain many fundamental characteristics in order to be reliable. For example, the appraiser carrying out the appraisal on your new construction home will explicitly define the property as well as the scope of the work being performed. In addition, the appraisal for your planned home will provide a value estimate as well as how it was calculated. Appraisers must also employ forms that allow data and analysis to be clearly presented during the house appraisal process.
How Long Does an Appraisal Take for a Refinance
Going over the definition again, an appraisal is the market value of your home as determined by a professional appraiser. An appraiser evaluates the worth of your home by inspecting it and comparing it to recently sold properties in your neighborhood. You mustn’t be present during the appraisal of your home unless you are the seller. You can, however, attend the refinance appraisal.
When the appraisal is received, it should take no more than two weeks to close on your mortgage. Unfortunately, it is impossible to predict how long your refinance will take following your evaluation because various third parties can cause delays
Your lender can only provide you with an estimate of how long the appraisal process will take once ordered. However, make every effort to be as transparent with information as possible to avoid unnecessarily delaying the process.
Read on to learn about why you might want to refinance and how long it takes to get back a refinance appraisal once ordered.
Why You Might Want to Refinance
When you refinance, a lender nearly usually asks you to go through the appraisal process because they want to ensure that you aren’t getting a loan for more than your home is worth. A refinance appraisal can evaluate if the home’s value has increased or decreased since its purchase.
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Let us consider some of the following reasons you might want to refinance:
- To use a cash-out refinance to turn your equity into cash for home upgrades or debt consolidation: With a cash-out refinance, you can kill two birds with one stone—You convert the equity in your property into cash while also refinancing your mortgage.
- To get rid of private mortgage insurance (PMI): A typical lender would terminate PMI if you have 22 percent equity in your house, or when your principal balance exceeds 78 percent of the initial value of your home. You can get there faster if you refinance.
- To convert your loan from a fixed-rate to an adjustable-rate mortgage (ARM): A fixed-rate mortgage is one in which the interest rate remains constant throughout the life of the loan term. In other words, you will maintain the same interest rate for the duration of your loan. An ARM, on the other hand, is a home loan with an interest rate that is initially fixed and then increases over time based on market conditions.
- A rate and term refinance can help you receive a cheaper interest rate or monthly payment. A rate and term refinance allow you to replace your existing mortgage with a new mortgage arrangement. You’d probably do this to get a better interest rate and financing arrangements.
What Factors Do Appraisers Consider in a Refinance Appraisal?
Appraisers consider a few key elements when determining how much a home is worth. To assess the worth of your home, they look at the following factors:
- Interior and external condition
- The state of the home’s utilities (plumbing, electrical, HVAC, etc.)
- The number of rooms in the house, as well as any additions
- Improvements and upgrades made to the home following its purchase
- The house’s location
- Comparable sales in the neighborhood
Customers who want to refinance their mortgage have various options, some of which may not require an appraisal. When a refinance appraisal is ordered, it must be supported by changing market conditions and/or provable improvements made to the property.
Conclusion
In conclusion, the home appraisal is an important phase in the house-buying process that occurs within a week after making an offer on a new home and doing a home inspection. We’ve described how long a new construction home appraisal takes and what aspects an appraiser will consider helping you prepare.
If you’re considering the refinancing process, the first step is to determine your refinancing possibilities and your standing with lenders.
FAQs
How lond does an appraisal inspections take?
It takes around 10 minutes per 1,000 square feet to conduct an appraisal inspection. It takes about 20 minutes to assess a 2,000-square-foot home.
What can cause delays in appraisal?
A busy local real estate market is among the most typical causes of a delayed or postponed appraisal. The lack of available appraisers in a steaming or hot market usually causes delays in appraisals. Even while demand is high. Scheduling issues with the owner of the house you’re buying or the seller’s agent are another major cause of appraisal delays.
When is the appraisal report delivered to the buyer?
An appraiser conducts a physical inspection of the property, assesses the market worth of nearby homes, and comes up with a final estimate of the property’s value. When the report is complete, it will be sent to the mortgage lender that requested it. An appraisal report of your new construction can take anything from a few days to a few weeks to be returned.
I'm curious to know how an appraiser determines the values my home?
In order to determine the value of your home, the appraiser compares it to other properties around the neighborhood. And as such, adjusts for variances.
