Our Blog

There are a number of important processes that will take place during a home purchase situation, and one of these that's vital for the buyer in particular is the appraisal of the home. Referring to a part of the process where the home is evaluated by a third party to obtain its value, the appraisal is important for several parts of this setup, including how much money you can receive from a mortgage lender toward the home. 

At Primary Residential Mortgage in Plano, Texas, we're happy to help clients throughout the state navigate the entire home loan and homebuying process. We offer a wide range of mortgage options for varying client needs, plus expertise on various parts of this process -- including appraisal. What is appraisal, why is it important, and what else do you need to know about it? Here's a basic primer.

Home Appraisal Basics

For those who have never been through this process before, a home appraisal refers to an unbiased estimate of the true (or fair market) value of a home, as determined by a professional appraiser. Appraisers will look at a number of factors in order to come to this number, including the home's size and features, the lot it sits on, recent comparable sales in the area, and more.

While you as the buyer are not required to order an appraisal on the home you're interested in purchasing, it is important to be aware that your mortgage lender will almost certainly require one. This is because the appraised value of a home will play a role in how much money the lender is willing to lend you toward its purchase. In other words, if the appraised value of a home is less than the agreed-upon purchase price, you may need to come up with additional funds in order to make up the difference.

It's also important to be aware that a home's appraised value can sometimes be lower than its actual market value. In a sellers' market where there are more buyers interested in purchasing homes than there are homes available, for instance, it's not uncommon for buyers to end up paying more than the appraised value in order to secure a particular home.

What Appraisers Look For

An appraiser will typically look at three main factors when determining the value of a home:

• The home's physical features: This includes its size, age, condition, and any upgrades or renovations that have been made.
• The lot the home is built on: Factors like the size and location of the lot can impact its value.
• Comparable sales in the area: Appraisers will look at recent sales of similar homes in the same area in order to get an idea of what the current market value for such homes might be.

It's important to remember that appraisers are not concerned with things like your home's emotional value or any sentimental attachments you may have to it. Instead, they are focused on coming up with an unbiased estimate of the home's actual value in the current market.

For more on home appraisals and why they matter, or to learn about any of our mortgage loans or other homebuying services, speak to the team at Primary Residential Mortgage today.