Why Do Home Appraisals Cost so Much?

Regardless of whether you’re purchasing a new house or revamping your mortgage, getting an appraisal is a critical part of the process. During a home appraisal, a professional determines your home’s worth before putting it on the market.

However, the cost of your home appraisal may vary depending on the size and location of your property. The appraisal fee may also differ based on the consumer bank you choose. Here we discuss in-depth the factors affecting your home appraisal fee and their average cost:

What Are Home Appraisals?
Before buyers and sellers complete their purchasing, refinancing, or selling process, they must get an appropriate home evaluation. An appraisal is a vital component of the home buying process and is necessary for the lender and buyer.

A home appraisal refers to a certified appraiser’s analysis of a home’s worth. Appraisers craft these reports based on several factors, including:

• Comparable homes in the neighborhood
• Location
• Condition
• Age
• Size of the home
• Construction
• Square footage
• Updates
• Improvements
• Curb appeal
• Style
• Local market

The results of appraisals help determine the fee a mortgage lender will allow buyers to borrow. Ultimately, it helps protect buyers from paying an amount higher than the house’s value, whereas it prevents lenders from offering homeowners extra cash.

Why Are Home Appraisals Necessary?
Appraisals are vital when buying or selling a home for a variety of reasons. Here’s a list of reasons you may need a home appraisal:
1. Appraisals are crucial for homebuyers because it helps protect your investment. An accurate appraisal ensures that buyers don’t have to pay an amount exceeding the home’s actual worth.

2. An appropriate appraisal is critical for securing financing. Typically banks only issue a loan up to the fair market value of a house. Thus a low appraisal may result in the lender offering only the appraised amount.

3. Refinancing your home includes replacing the old mortgage with a brand new one. For this reason, lenders require an appraisal to ensure the new value matches the home’s actual value.

4. Home equity loans are second loans banks offer borrowers based on the amount of equity remaining after subtracting the mortgage value from the home’s current value. If appraisals show a reduction in the home’s value, borrowers may no longer be eligible for one.

5. Most states calculate property taxes depending on your home’s fair market value. In case the value of your home on the property tax bill spikes up, you may be able to request a tax assessment. Ultimately, an independent appraisal helps lower your overall property taxes.

How Much Does a Home Appraisal Cost?
The cost of an appraiser typically depends on the following characteristics:

• Neighborhood characteristics
• Sale prices of similar homes
• Local housing market trends
• Property size
• Age and design of the house
• Condition of the house
• Electronic appliances
• Additional amenities like fireplaces/decks
• Different materials present in the interior and exterior of the house
• Improvements and renovations in the past few years

An appraisal usually varies between $200 to $600, whereas an appraisal’s national average cost is $335.

On the other hand, the appraisal fee for larger properties varies between $500 to $800 and, in some cases, even higher.

What Factors Affect Home Appraisal Fees?

The cost of an appraisal varies greatly depending on several factors. The cost of an appraisal may go up if:
Mortgage Type
If the government offers you a home loan, you’ll need a particular appraisal. Apart from estimating your home’s value, these appraisals analyze whether the property meets the minimum structural and safety requirements set by federal agencies. Thus, appraisals for government-backed mortgages are typically higher.

In fact, the average appraisal cost varies from $400 to $500 for FHA and VA loans. On the other hand, conventional loans are between $300 and $400.

The Location and Size of the House
Home appraisal costs can go up depending on the location, size, and complexity of your house. Houses present in big cities typically cost more than other places.

Moreover, bigger houses, unusual and complex properties boasting vast areas require extra visits and in-depth analysis.

You’re Getting a Big Loan
A jumbo loan refers to a mortgage that exceeds limits set by a lender and is typically more extensive and complex. Thus, if you’re seeking a jumbo loan, you may have to pay more for an appraisal. In fact, some lenders may even request two different appraisals to ensure the home’s value is accurate.

The House is Present in a Unique Location
If you score a mansion present in a remote area overlooking an ocean or sitting atop a hill, you’ll have to pay a higher amount for an appraisal. The reason being that there’s not a vast market of similar houses to compare it with.

When to Get a Home Appraisal?
Buyers require an appraisal before getting a mortgage. In this case, mortgage companies themselves will organize an appraisal as soon as the seller accepts the consumer’s offer.

Simultaneously, sellers will also require a home appraisal to find the accurate selling price of a property. If you’re seeking to refinance your home loan, you’ll still need a home appraisal to ensure the mortgage company can compare your property’s new value to the previous ones.

The Takeaway
Buyers may assist appraisers in making an accurate and appropriate evaluation of your home’s worth by collating information relevant to new improvements and maintenance projects. Keeping a timely record of these changes also ensures you have proof that you boast a well-kept house.

From revamping the whole kitchen to simply enhancing curb appeal by ensuring a clutter-free garden, buyers and sellers can upgrade their property in many ways. To get a high appraisal, homeowners may consider getting interior and exterior repairs.

Ready to get an in-depth analysis of your house? Then reach out to our industry experts to receive an insightful property appraisal!