When you’re a first time home buyer, you have a lot of questions. The entire process is new to you and you’re not sure what to expect. Part of the process of obtaining a home loan involves getting a property appraisal. But how long does an appraisal take? Days, weeks, months? Here’s what first time home buyers need to know.
What Is an Appraisal?
The job of an appraiser is to determine the fair market value of a home. They do this by comparing the value of homes sold in the area and inspecting the home in-person. Mortgage companies require appraisals because they want to make sure that the transaction isn’t too risky and the loan is equal to the property’s value.
What Does an Appraiser Look for?
An appraiser looks for factors that will help them determine the value of the home. This includes its condition, amenities, and dimensions. Here are some of the things that appraisers examine:
- Interior and exterior condition
- Number of rooms
- Design, layout, and functional
- Home improvements
- Condition of HVAC, electrical, and plumbing
- Pools, garages, porches, decks, and other exterior features
- The location of the home
How Long Does a Home Appraisal Take?
One of the most common questions first time home buyers have about appraisals is, how long does it take? The inspection part of an appraisal usually takes about 30 minutes to 1 hour to complete. The entire process, on average, from the point when the appraisal is ordered to when the report is submitted, usually takes a few days to a week. In a busy market, appraisals can take several weeks.
What Happens When the Appraisal Is Low
Sometimes, an appraisal comes back lower than the purchase price. There are a number of reasons why this could happen, but some of the most common are:
- It’s a seller’s market and bidding wars have increased prices of homes in the area
- It’s a buyer’s market and the home has been overpriced
- There has been an increase of foreclosures in the area
- The appraiser is inexperienced or unfamiliar with the local market
- The appraiser is using outdated comparables or ones that are not a good match
A low appraisal often causes first-time home buyers to panic. But don’t worry; if your appraisal is low, you still have a few options available to you. You can:
- Try to dispute the appraisal. The seller’s agent can submit a Reconsideration of Value (ROV) that includes newer and more accurate comparables.
- Ask the seller to reduce the purchase price
- Pay the remaining money out of pocket or come to a compromise with the seller
- Get a second appraisal
- Back out of the purchase if your contract is contingent on appraisal
While low appraisals do happen from time to time, they’re not extremely common. According to Fannie Mae, appraisals below asking price occur only 8% of the time.
Have Questions? We’re Here to Help!
As a first-time home buyer, it’s normal to have questions. The experts at Mortgage Solutions Financial are always available to chat whenever you have questions or concerns. Call today to speak to a representative.
