Video Duration: 1 minute
A home appraisal is an important part of the home buying or refinance process. Let's take a look at what it is and how it works.
An appraisal is a review of the home and its features to determine its market value compared to other similar homes in the area. This information helps the lender determine what the home is worth.
An independent third-party company performs the appraisal. They look at the inside and outside condition of the house, verify the square footage and features, and check for potential health and safety issues.
Next, the appraiser will compare this information with 3 to 5 similar homes in the area. These are called comparables or “comps.”
The appraiser will attempt to select comparable houses that are similar in size, have similar numbers of bedrooms and bathrooms, are geographically close, and have been recently sold or listed. Very few homes are the same, so the appraiser may make adjustments for differences, such as square footage, location, or views.
Next, a review of the appraisal is completed for quality control.
The value of the property is officially released to the lender and the home buyer. The appraisal may list required repairs. These may be minor and easily addressed. If the repairs are more significant, and the buyer wants to move forward, they can negotiate with the seller to complete the repairs before the loan is approved.
Appraisals are a common and necessary part of the home loan process. Contact your USAA Bank lending team with any questions you may have. We're here to help you each step of the way.