Appraisal 101

You’ve decided to build with us and and now it’s time to work on your loan and get everything in order before the house is all yours. One of the first items on your closing checklist will be the home appraisal. So, what exactly is that?


The home appraisal is essentially a value assessment of the home and property. It is conducted by a certified third party and is used to determine whether the home is priced appropriately. Your lender has a system for ordering appraisals and will order it on your behalf (you don’t have to call appraisers to try and set one up).

During a home appraisal, the appraiser conducts a complete visual inspection of the interior and exterior of the home. He or she factors in a variety of things, including the home’s floor plan functionality, condition, location, school district, fixtures, lot size, and more. An upward adjustment is generally made if the home has special features such as a deck, a view, or a large yard. The appraiser will also compare the home to several similar homes that were sold within the last six months in the area. If your home is yet to be built, the work will be done based on floorplans and architectural drawings, surveys, and general information from other homes we have built.

The final report must include a street map showing the property and the ones’ compared, photographs of the interior and exterior, an explanation on how the square footage was calculated, market sales data, public land records, and more.

After it is complete, the lender uses the information found to ensure that the property is worth the amount they are investing. This is a safeguard for the lender as the home acts as collateral for the mortgage. If the buyer defaults on the mortgage and goes into foreclosure, the lender generally sells the home to recover the money borrowed. So in order to protect themselves, they want to be sure that they’re not loaning you more than the collateral is worth.

Your lender can tell you a bit more about the process and give you updates on when the appraisal is ordered and when the report is expected back from the appraiser.

image courtesy of tony.mariotti

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