Most of us have our own reasons for wanting to buy a home. Maybe we want a bath with a luxury spa. Maybe we want a huge deck for parties.

But your lender doesn't care about such things - the designer tub, the fire pit, and all the extras. What they really care about is the actual value of the home and if it's worth as much as the value of the mortgage.

To a bank, a house is collateral. That means that they can foreclose on the home if you miss payments.

Therefore, a home must be valued at, or above, the agreed-upon purchase price, and this has to happen before you can close on a house. That’s where a home appraiser comes in.

A Home Appraiser Is Neutral

After you sign a home purchase agreement, which is the contract between you and the seller about the terms of the pending sale, and before your lender approves your loan, the home you’re buying must pass an appraisal.

An appraiser is either licensed by the state or a certified professional. It's their job to asses the value of the home. They are on no one's side, not you or the seller. They are chosen by your lender through an appraisal management company, which is a neutral entity.

Appraisers survey a house in person, using five main criteria to determine the value of a home:

  • Location
  • Age
  • Condition
  • Additions or renovations
  • Recent sales of comparable homes

Be Prepared to Pay for the Appraisal — or to Negotiate

Usually the home buyer is the one that pays for the appraisal, and this is generally included in the closing costs. But this can be negotiated. You can always ask if the seller will pay for it.

Home appraisals are not as expensive as you might think. They will usually cost between $287 and $373.

Appraisals Take a While, So Be Patient

Typically, a purchase agreement has a “home appraisal contingency” requiring that the appraisal be completed within 14 days of the sales contract being signed. Because it takes appraisers some time to visit your house and write a report — up to a week, or longer in a busy housing market — your lender will order the appraisal immediately after you sign the purchase agreement.

Check back on our blog twice a week for more real estate news, ideas, and local events in Austin and Lake Travis. You can search for the perfect home on our website using our powerful home search tools. You can also get free listing alerts of homes as they hit the market at WelcomeToLakeTravis.com. And you can always feel free to call us at 512-657-4467​ to talk to an experienced agent today.