Understanding the Home Appraisal Process: When is the Appraisal Ordered?
In residential real estate, property appraisals play a crucial role in determining the fair market value of a home. Understanding the appraisal process is vital to ensure a smooth and successful transaction, whether you’re a buyer, seller, or lender. One common question that arises is: When is the appraisal ordered? In this blog post, we will shed light on this important step and explain when the appraisal is typically ordered in the appraisal process.
The Appraisal Process Overview:
Before delving into the specific timing of ordering an appraisal, it’s essential to understand the overall appraisal process. When a buyer wishes to obtain financing to purchase a home, the lender often requires an appraisal to assess the property’s value. The appraisal aims to provide an unbiased and professional opinion of the property’s worth, considering various factors such as location, size, condition, and recent comparable sales in the area to ensure the lender has sufficient collateral for the loan.
When is the Appraisal Ordered?
The appraisal is typically ordered after the buyer and seller have reached an agreement on the purchase price and have executed a purchase contract. This contract serves as the basis for the lender to order the appraisal. Once the contract is fully executed, the lender, or their designated appraisal management company, initiates the appraisal request.
The lender’s decision to order the appraisal usually depends on the buyer’s loan application and the preliminary underwriting process. The buyer’s financial qualifications, including creditworthiness and income verification, are assessed at this stage. If the buyer meets the lender’s criteria and the underwriting process progresses positively, the lender orders the appraisal. There are times when the real estate agent may wish to wait to order the appraisal until after the home inspection has been completed if they have concerns about the property’s condition.
It’s worth noting that the buyer is typically responsible for the appraisal fee, which is paid upfront or included in the closing costs. The lender typically requires payment before ordering the appraisal, ensuring the buyer’s commitment and ability to proceed with the transaction.
The Role of the Appraiser:
Once the appraisal is ordered, a licensed or certified appraiser with expertise in the local market is assigned to assess the property. The appraiser conducts an on-site inspection to evaluate the property’s physical characteristics, such as its size, layout, condition, and any improvements or upgrades. They also consider factors like the property’s location, proximity to amenities, and recent comparable sales in the neighborhood.
After gathering all the necessary information and conducting a comprehensive analysis, the appraiser prepares a detailed report that includes their professional opinion of the property’s value. This report is submitted to the lender, who uses it to determine the maximum loan amount they are willing to provide based on the property’s appraised value.
Conclusion:
In the appraisal process for residential real estate transactions, the appraisal is typically ordered after the buyer and seller have agreed on a purchase price and executed a purchase contract. Once the preliminary underwriting process is completed successfully, the lender or their designated appraisal management company initiates the appraisal request.
By understanding when the appraisal is ordered, both buyers and sellers can better anticipate the timeline of their real estate transaction. It is important to remember that the appraiser’s role is to provide an unbiased and professional assessment of the property’s value, helping to ensure a fair and well-informed decision by all parties involved.
Should you have any additional questions, please get in touch with us at 480-926-8528 or BensonAppriasals@cox.net.
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