Posted 05/05/2017

There are many steps involved when purchasing a home. An appraisal is one of them required by the lender to find the “value” part for the Loan-to-Value calculation of the mortgage. An appraisal is not just to protect the lender but also protects the buyer from paying too much for a home.

A home appraisal is an unbiased report done by a certified, state-licensed professional who determines the value of a piece of real estate based on comparable sales in the neighborhood or closely surrounding areas.  Comparables or “comps” are similar homes that have recently sold either in the general area or that specific neighborhood. Appraisers will look for homes with similar characteristics of the subject property home that have been listed and sold within the past three to six months.

Appraisers will look at the following:
Home exterior – The foundation, roof, siding, gutters, and soffits will be looked at for leaks, defects, cracks, and any deterioration.

Size of the property – Both the lot size, home size, number of rooms and bathrooms are important considerations for the appraiser.

Condition of interior – Appraisers will be looking at the condition of the windows, doors, flooring, walls, plumbing, electrical, kitchen, and bathrooms. They will also take note of the condition of the appliances and light fixtures.

Home improvements – Any improvements – new flooring, kitchen or bath remodel, new HVAC –  to the home since the last appraisal will be of value in the appraisal.

How much does an appraisal cost?
An appraisal can range from $400 to $750 depending on the size, location, # of units (duplex/triplex), or if the property is being used as a rental/income-generating property. Although the lender requires the appraisal, the buyer is responsible for the cost.

What if the appraisal does not support selling price?
There are a couple of things that can happen. If you’ve reviewed the appraisal report and feel that there are some inaccuracies, you can appeal. This will involve your lender and possibly the real estate agent. You’re now working as a team to find things that may have been overlooked. On the flip side, if the report is accurate and there is a significant difference between the selling price and appraised price, you can renegotiate the sales price, walk away from the deal or bring more cash to the closing. Your lender’s not going to finance more money for a higher loan amount if the appraisal came in lower than expected, so you’ll have to make up that difference yourself.

Keep in mind…
Emotions run high and low during the home buying process. Wait for the offer to be accepted, wait for the mortgage approval and wait and hope the appraisal report supports the sale price. But, the home buying process is designed to protect you so if things don’t work out the first time around, it may not have been the right house, the right time or right neighborhood for you.

Mortgages Unlimited is a local mortgage company serving not only the Twin Cities but also, South Dakota and Wisconsin. Minnesota Housing programs are not available in South Dakota or Wisconsin. We work on the behalf of our clients ensuring they are getting the best possible loan while providing outstanding customer service.

Give one of our Mortgage Consultants a call @ 763-416-2600 if you are looking to purchase a home or refinance your existing home loan. Or you start a secure online application at


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