Dan Hubrich and the team at Mountain View Mortgage are back this month to tell us about the appraisal process when buying a home

In the world of real estate, there are numerous crucial steps that must be taken to ensure a smooth and successful transaction. One of these essential steps is the appraisal process. In this article, we'll dive into the when, how, and why of real estate appraisals.

When is an Appraisal Ordered?

The appraisal process begins as soon as the intent to proceed is signed, typically included in the initial disclosure package. This step marks a significant milestone in a real estate transaction. Once both parties have agreed to move forward, the appraisal is ordered to determine the current market value of the property.

It's important to note that the appraisal serves as an unbiased assessment of the property's value. It helps ensure that the agreed-upon purchase price aligns with the property's worth in the current market. In essence, it acts as a safeguard to prevent either the buyer or seller from overpaying or undervaluing the property.

When is the Appraisal Paid For?

The cost of the appraisal is typically paid for at the time of the appraisal order. This expense is usually the responsibility of the buyer, though in some cases, the seller may choose to cover this cost to facilitate the sale. The exact cost of an appraisal can vary depending on factors such as the property's location, size, and complexity, but it is a relatively small investment compared to the overall purchase price of a home.

Paying for the appraisal upfront is a standard practice because it ensures that the appraiser can conduct their assessment without any financial bias. By having the buyer cover the cost, the appraisal remains an objective evaluation of the property's value.

In conclusion, the appraisal process is a critical step in the real estate transaction journey. It is ordered as soon as both parties commit to the deal, with the cost typically borne by the buyer. The appraisal's primary purpose is to provide the underwriter with an accurate current market value of the property, allowing them to make informed decisions about the loan's approval. Understanding this process is essential for buyers, sellers, and real estate professionals alike, as it ensures transparency and fairness in real estate transactions.