What Exactly Is a Home Appraisal?

When Do You Need a Home Appraisal

A home appraisal is the estimated value of a property based on the condition and location of the property, plus comparable sales and market trends. It’s performed by a licensed Austin appraiser. Why do you need one? There are several reasons why an appraisal is necessary, and we discuss the top five below. We’ll also answer some FAQs about the process and what you can expect.

When Do You Need a Home Appraisal?

1. Financing a purchase of a home

A home appraisal is a term frequently used in the home buying process. Home appraisals are primarily performed at the request of a mortgage lender. All lenders require an appraisal during the loan lending process as an objective way to assess the home’s market value and ensure that the amount of money requested by the borrower is appropriate. In a nutshell: when you’re buying a home in Austin, banks want to protect their investment should a buyer default on their mortgage. If the actual market value of a property is lower than the sales price, the lender won’t be able to sell the property for enough money to cover the loan.

2. Tax assessment

Receiving your property tax bill in the mail is always an anxiety-inducing moment. Property taxes and your home’s appraised value go hand-in-hand. The higher the assessed value of your house, the higher the property taxes. If you believe your property tax bill is too high, you can formally appeal your property tax bill with the Appraisal Review Board. This link works for Travis County, but each county has their own taxing office.

As part of the appeals process, you’ll be tasked with gathering important information, such as comparable market analysis (information about the sale prices of nearby homes). We, at Habitat Hunters, provide this information at no cost to our current and former clients, and for a reasonable fee to others. Additional information that will help you are: documentation regarding your home’s location (if it borders a road with heavy traffic or other external characteristics that can lower the assessed value of your home) and the current condition of your home (such as being in need of significant repairs) all of which can lower the assessed value of your home, and ultimately, your taxes.

Many homeowners consider having their home independently appraised, which could help strengthen their case during the appeals process.

3. Refinancing

Thinking of refinancing your mortgage? Because market conditions change rapidly and property values in your neighborhood might be much higher (or lower) than when you bought your home, you need to have your property’s value appraised when refinancing. The results of your home appraisal will determine your ability to qualify for the new loan you want. Ideally, you’ll want to receive an appraisal value that’s higher than the total refinance amount. Unfortunately, an appraisal can come back low, which can negatively impact your refinancing plans.

4. Applying for a Home Equity Loan

The Federal Trade Association defines a home equity loan as a loan for a fixed amount of money that’s secured by your home. You repay the loan with equal monthly payments over a fixed term, just like your original mortgage. If you don’t repay the loan as agreed, your lender can foreclose on your home. The actual amount of the loan also depends on your income, credit history and the market value of your home. Similar to mortgage loans, a lender requires a home appraisal for home equity loans to protect itself from the risk of default.

5. Divorce

As part of the divorce process, couples have to negotiate the division of property — including the family home. Successfully negotiating a divorce property settlement depends on an accurate assessment of the value of the property to be divided, performed by a fair and impartial appraiser. After the appraisal is performed, a decision must be made: does one person get the house (perhaps by buying out the other person), or will the property be sold and the proceeds divided?

More Information on Home Appraisals

What factors determine the value of a property?

  • The general condition of the home’s interior and exterior, size of gross living area, number of bedrooms and bathrooms, signs of any obvious damage, any improvements or additions that enhance – or detract — from the home’s value.
  • data of similar homes that have recently sold in the same area.
  • of additional market data (neighborhood, local amenities, accessibility to transportation, schools, etc.)

How long does an appraisal take?

This depends on the size and details of the property. It’s estimated to take anywhere from 30 minutes to 3 hours.

How much does an appraisal in Austin, TX cost?

The cost varies by property type, complexity and location. Estimates start at about $350.

Who pays for the appraisal?

When it’s a home sale, the buyer of the property is responsible for paying the cost of an appraisal; it’s typically paid at closing as part of the closing costs. If you’re looking to refinance, applying for a home equity loan or seeking the expertise of an appraiser when appealing your property taxes, you, as the homeowner pays for the appraisal.

Do you have questions about a home appraisal or the process? Reach out to connect with one of our experienced agents.