What Is The Home Appraisal Process in California?
Whether selling or buying a home, a home appraisal is a key aspect of the transaction. Unless the purchase of a home is “all cash”, an appraisal is always necessary. Lenders utilize home appraisals to determine how much they will loan for your property. Many buyers and sellers are nervous about the outcome of their home appraisal as it determines how much of a loan the lender will offer, and essentially the purchase price of the home. But understanding the home appraisal process will ensure that both buyer and seller are well prepared and can navigate a home appraisal in the most strategic way.
There are many questions regarding Home appraisals in California including:
What is a Home Appraisal?
How Long Does A Home Appraisal Take?
What is the Appraisal To Closing Deadline?
How Much Does A Home Appraisal Cost?
Who Pays For The Appraisal In California?
What happens after you’ve received the appraisal report?
What Is An Appraisal Contingency?
How Does An Appraiser Evaluate My Home?
How Do I Prepare For A Home Appraisal?
How Does Having A Real Estate Agent Help My Home Appraisal?
What is a Home Appraisal?
When purchasing a home with a mortgage, it’s necessary to do an appraisal. With a conventional loan, most home buyers put down a downpayment of 20-30% of the purchase price. Before a bank is prepared to loan 70-80% of a property’s value, they must assess how much the home is truly worth. That’s where an appraisal comes in.
The lender is responsible for hiring an independent appraiser to evaluate your property and determine the fair purchase price. The appraiser will assess the value of your property based on location, condition, and neighborhood comps. The lender will then determine how much loan can be taken for the purchase according to the property’s assessed value.
How Long Does A Home Appraisal Take?
From the time an offer is accepted on a home until the home appraisal report is received, it is usually around 2-3 weeks.
Offer Accepted → Appraisal → Closing Timeline:
- The Lender Schedules An Appraisal Inspection:
After your offer is accepted for a property, most buyers choose to do general home inspections before contacting a lender. Because an appraisal usually costs a buyer between $700- $1500, buyers like to be fully committed to the property, before investing the money for a home appraisal. Also, after doing inspections buyers are aware of the total condition of the property and can better assess the value of the home.
After completing home inspections, you will contact your lender to schedule an appraisal. The lender is responsible for scheduling an appraisal with an independent appraiser. The appraiser can usually be scheduled within a few days.
- The Appraiser Comes to Home for an in-person inspection (30 minutes to 3 hours):
On the scheduled day, the appraiser will visit the home to observe the home internally and externally. An appraiser is not assessing your home in the same manner as the other home inspectors. Home inspections are thorough and complete, identifying repairs that have to be made and ensuring every aspect of the home is in order. On the other hand, an appraisal inspection assesses the property generally and objectively. The appraiser will look around the home to identify its overall condition, unique features, and upgrades.
Combining all the individual factors of the property as well as the location and neighborhood comps, the appraiser will then be able to complete a report on the home. The appraisal inspection process can take 30 minutes to a few hours, depending on the size and complexity of the property.
- The Lender Receives the appraisal report (2 to 7 days):
After the appraiser has assessed the property and gathered all relevant information, he will analyze the market and the neighborhood comps. The appraiser will then complete a thorough report evaluating the property as a whole. Writing the report can take around 2 to 7 days, depending on the appraiser. The appraiser will then send the report to the Lender. If the appraisal is at or above the contract price, the transaction proceeds as planned. If the appraisal value is below the contract price, it can delay or cancel the transaction.
- The lender determines the Loan and Mortgage based on the appraised value of the home:
Once the appraisal report is received, the lender will update the loan if necessary. Then, the mortgage underwriter will assess the loan and determine if they would like to accept or deny the application. Assuming the loan application is accepted and a mortgage is received, the home-buying process can now be followed through to closing.
How Much Does A Home Appraisal Cost?
A home appraisal typically costs between $700 to $1500.
Who Pays For The Appraisal In California?
Since the buyer is working with the lender to receive a loan for the property, the buyer will pay the appraisal fee.
What Happens After You’ve Received The Appraisal Report:
If the appraised value is the same as what you offered, then the transaction can proceed as planned. As your offer reflects the fair purchase price, the lender will propose a loan as expected and you will receive a mortgage estimate.
If the appraised value is below the offer price, the transaction is reevaluated and negotiations are made.
In our 18 years of experience in the Los Angeles real estate market, we’ve never lost an escrow due to a low appraisal. A member of our team is present at every home appraisal, prepared with neighborhood comps, property records, and thorough information on the property and the neighborhood. At The Bienstock Group, we price our properties for top dollar, but at fair market value, and our appraisals are always on target.
Sheri Bienstock
What Is An Appraisal Contingency?
Contingencies are essentially conditions for the sale of a home, outlined at the start of escrow. An appraisal contingency is a common contingency for real estate transactions in Los Angeles. This contingency allows the buyer to negotiate the sale if the home appraises for less than the agreed-upon sale price.
What Does a Home Appraiser Look At?
So what affects a home appraisal? A property’s appraisal value is influenced by the condition of the home, recent sales of similar properties, and current market trends. The home’s amenities, including the size of the home, the floor plan, and the overall condition are also key factors. The appraiser will perform a complete visual inspection of the interior and exterior and note the overall condition and quality of the home. They will then do a comparative analysis with other similar properties in the area to understand the comps.
How to Prepare For a Home Appraisal:
Before an appraisal comes down to your home, it’s important to do a walk-through on your own.
- Notice small fixes that can be made and make the repairs
- Make sure your home is perfectly clean and neat. A clean home presents much better to an appraiser and increases the perceived value of the home.
- Ensure that all safety devices are in place and working properly. Every home appraisal is required to check for safety features including smoke detectors, carbon monoxide detectors, working gas, and electricity.
- Be prepared with all recent upgrades and renovations you have done to your home.
- Have neighborhood comps to show to an appraiser.
How Does Having A Real Estate Agent Help My Home Appraisal?
A competent real estate agent will ensure the home appraisal process is smooth and easy for both buyer and seller. In our 18 years of real estate transactions in Los Angeles, we’ve never lost a deal because of an appraisal. A member of our team is present at every home appraisal, prepared with neighborhood comps, property records, and thorough information on the property and the neighborhood. At The Bienstock Group, we price our properties for top dollar,but at fair market value, and our appraisals are always on target.
About The Bienstock Group:
The Bienstock Group, led by Sheri Bienstock, is an expert real estate group in Los Angeles, Hancock Park, and Miracle Mile. Sheri is committed to her clients and will invest all her effort to get you the best results possible. Sheri has 235+ five-star reviews on Zillow, and has been ranked #1 listing agent in 90036 since 2009 and in Hancock Park since 2016.
