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  • Writer's pictureDonna Baker


It has finally happened — after months of searching, you’ve found your DREAM home. It is the perfect size for you or your growing family, the kitchen was just remodeled and there is a huge deck for entertaining. And best of all, the seller accepted your offer!

As we near your closing date, your lender will want to verify the home’s value with an appraisal. This might sound nerve-wracking, but don’t worry: Appraisals protect you from overpaying.

Let’s dive into appraisals to demystify the process:

Why are home appraisals important? An appraisal is an independent assessment by a licensed third party as to the current value of the property. No credible financial institution will lend you money for a house without an appraisal.

"The appraisal lets a lender and a buyer know what the loan collateral (the house) will sell for in a worst-case scenario," states Realtor® Delores Doussard of The Dream Team, RE/MAX Preferred. To give an extreme example, the bank doesn't want to be stuck with a home they lent the borrower a million dollars for but can only sell for $100,000 because that's all it is worth. The homebuyer shouldn't want that either, of course.

Appraisals exist for good reason, but because they are conducted after a price has been negotiated, parties have agreed to buy or sell the house and a contract has been signed it can make for tense times for everyone involved. It is in everyone's best interest that the appraisal is close to the price that both seller and buyer have agreed on.

That said, if it turns out you are about to buy a house for a wildly inflated price, that does not necessarily mean you're obligated to buy the house. But if you aren't careful, it could mean just that.

“When working with us, your purchase agreement will address the possibility that your appraisal comes in below the purchase price, and allow you to terminate the contract or renegotiate the price,” says Realtor® Donna Baker of The Dream Team, RE/MAX Preferred with offices in Swansea and O’Fallon, Illinois.

Who pays for the home appraisal? Typically, in our area of southwestern Illinois, the buyer pays for it at closing, which can be as high as several hundred dollars. The national average cost for a property appraisal is $309, according to data compiled by

How do home appraisals differ from home inspections? The two often get confused, but they aren't the same thing. Both an appraiser and home inspector will walk around the house and take a good look at it (usually, the inspector comes first), but they are each at the house for different reasons. The appraiser is looking at the value of the home; the inspector is looking for any defects with the home that may cause you financial grief later.

How long does the appraisal process take? It used to take a couple of days, but in recent years, particularly since the recession – when federal guidelines changed the appraisal process – it's more often a week or two. Underwriters can request more information about the house than they could in past years, and gathering that data and photos can take time.

What does an appraiser look for? An appraiser will physically measure the home’s square footage and visually inspect the entire property. They will note things like:

Floor plan functionality and the number of bedrooms and bathroomsAge of the house and its overall appearanceValue of any recent updates or remodelingSize of the lotDesirability of the surrounding neighborhood

Comparing all of that against similar nearby homes sold within the last 30-90 days, the appraiser arrives at the home’s value.

If you're a homeowner, what can you do to improve the process? Nothing, once the process starts. But before the appraiser comes by, you can take these common-sense steps.

"It's important to have the property look as good as it possibly can. You want to help the appraiser see your property’s potential so they will possibly reconcile a value closer toward the upper end of the range," state local Realtors® Donna Baker and Delores Doussard.

After all, appraisers are only human. You could have a really cool house easily worth between, say, $300,000 and $325,000, but if it's junkie, it's easy to imagine the appraiser coming down closer to $300,000.

To be prepared, the day the appraiser comes, Baker and Doussard say “the lawn should be mowed, the landscaping weeded and the bushes trimmed. Clean the house. Get out the air freshener. Turn on the lights and open the blinds. It is also very helpful to sit down the day or night before the appraiser arrives and make a list of repairs and improvements that have been done to the house over the past several years."

The Dream Team further advises, “If you have put on a new roof or bought a new hot water heater, let the appraiser know. Note anything you can think of – the appraiser will decide what is important to the value. It does not have to be formal or detailed. Just thoughtfully note everything so you can give it to the appraiser before he or she leaves."

But don't get too excited if you've spent a lot on repairs and renovations. Your $30,000 kitchen remodel may help the appraisal, but it won't automatically mean your house is worth an extra $30,000.

Basically, "The more information a seller and their agent can give an appraiser that they can't find out just from checking the listing and walking through the home, the better” say Donna and Delores.

What if it’s valued for less than you expected? As stated previously, if the home appraisal comes back under the negotiated price a lender won’t approve a loan for more than the appraised price.

If you still want to buy the home, we can assist you to negotiate a lower price or you can choose to challenge the appraisal and pay for a second opinion.

Another option is to walk away. This may not sound ideal, and it will probably be hard to do. But our goal is to get you the right home at the best price. If an appraisal comes in low, we’ll discuss all the options available to make sure you don’t overpay.

Are you ready to find your DREAM home? Reach out to Donna Baker and Delores Doussard—your DREAM Team today to get started.

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