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Appraisal / Valuation

 Whether you’re buying a home (or commercial property) or refinancing your mortgage, an appraisal is a significant step in the process. Read on to learn more about what an appraisal is, how it works, how much it costs and what to do after the results come in. Home appraisals are an important component of any real estate transaction for buyers, sellers and lenders alike. Whether you’re buying a new home, selling your property or refinancing your mortgage loan, it can be wise to familiarize yourself with what your specific appraisal process might include in order to be as prepared as possible for whatever comes next.

Appraisals are waived when buying from any of our in-house home providers because the property value would already be known across the group. However, prospective homebuyers are entitled to carry out their own appraisal or valuation at their own cost.

But appraisals are mandatory if/when buying from external developers and/or home providers.


What Is An Appraisal?

An appraisal is the estimated value of a home determined by an inspection of the property and its comparison to recently sold homes in the area to estimate the value.

Before you complete the home buying, selling or refinancing process, it’s required that you first get a home valuation, the most common of which is an appraisal, which gives an estimate of the value of the home in question. The findings from an appraisal determine the amount a mortgage lender will let you borrow for the property.

An appraisal answers the question, “How much is my house worth?” and protects the buyer from paying more than the home is worth. In both a purchase and a refinance, it prevents the lender from giving the homeowner more money than the home is worth.


Real Estate Appraisal Vs. Home Inspection

While both occur before you purchase the home, there are a few differences between an appraisal and an inspection to understand.

For one, a home appraisal is required by the lender, while a home inspection is recommended but not mandatory. Because of this, you are responsible for finding a home inspector and scheduling the inspection. Meanwhile, the lender will schedule your appraisal for you.

Another way in which the two differ is in their purposes. An appraisal determines the home’s value, while an inspection determines its condition. As a result of this, their processes are different.

In the most basic terms, a home inspection dives more into the functional parts of the home, using special equipment to find problems that may not be seen by the naked eye. An appraisal does a more surface-level review of the home and involves research on similar, recently sold homes in the area. These homes are known as comparables, or “comps.”



Who Appraises The Home (or Commercial Property)?

Appraisals must be conducted by a licensed, third-party appraiser who has no connection to the buyer, seller or lender. That way, all parties can be sure the determined market value is fair, unbiased and free of any influence from any party that could benefit.

The lender usually orders the appraisal, but the borrower is the one who usually pays for it. The appraisal fee is an upfront, out-of-pocket expense that will not be refunded if either party fails to move forward with the sale.



How Much Does A Home (or Commercial Property) Appraisal Cost?

Most appraisals cost GHS2,000 – GHS9,000. However, the cost of an appraisal depends on a few factors, including:

• The size of the home

• The type of home

• The home’s location

• The condition of the property

• The amount of work and time required


These factors affect the amount of time, effort and work that go into the appraisal, which is what ultimately influences the price the borrower will pay. For example, a larger home or multiunit property has more space to walk through and assess.

A home that has unique characteristics makes it difficult to find comps because those features often make the home one of a kind. If the home is in a remote area with nothing around it, the appraiser may have difficulty finding any other home in the area, let alone one that is similar. This may require deeper research, which takes more time.



How Long Does A Home Appraisal Take? Step-By-Step Process

In general, the home appraisal process can take up to a week or more to go from the date of inspection to the appraisal report. Before the lender can order the appraisal on a new property, you must put an offer in on the home, have it accepted and sign a purchase agreement. After that, the appraisal process can begin.

1. Your Lender Orders

The Appraisal This process starts with the lender ordering the appraisal. Once the appraisal is ordered, an appraiser will come to inspect the home.


2. An Appraiser Comes To The House

Depending on the type of loan you get, your appraiser will inspect certain parts of the home for specific reasons. They’ll inspect the home to learn more about its features, to ensure things like heat and electrical are working properly and that there are no safety issues.

Many of the issues they find during the appraisal must be resolved before the buyer moves in. We’ll discuss some of the appraisal criteria for different loans later.


3. The Appraiser Creates A Report

Once the appraiser completes their inspection, they will review comps to come up with the fair market value of the home. The appraiser will create a report that should contain a detailed description of the property, including its condition and its basic and unique features.

This report may also include general data on the market and the location of the home, other properties used as comps and information that supports the appraiser’s findings and final valuation. You will receive a copy of the report for your own records.

If the home is appraised at or above the purchase price, the loan will be processed as usual. If the home is appraised lower than the agreed-upon purchase price, more steps will need to be taken since the lender cannot lend more money than the home is worth.


4. Your Loan Terms Are Finalized

After the appraisal is done and the purchase price is officially set (either by continuing or in the process of renegotiating), the lender will finalize your loan terms. you’ll receive a Closing Disclosure that details your down payment and closing costs as well as the terms of your mortgage, and then you’ll close on your loan.

If this all sounds like too much hassle, there may be a way to bypass the process altogether, but this doesn’t happen often. In some cases where you're buying the house from any of our in-house home providers, the value would already have been known and no appraisal will be made mandatory. It should be noted that there’s some additional flexibility along with safety precautions being taken due to COVID-19.



How Long Is A Home Appraisal Good For?

Generally, a home appraisal is good for a total of 120 days (4 months). If you do not close on your home within that time, you will need to have another appraisal. Some people may be afforded an extension, but only in certain circumstances and only if they’re eligible. An appraisal has a short lifespan because market conditions change. Home sales from 6 months ago might be drastically different from those in more recent months, especially if the real estate market is volatile.



What Do Appraisers Look For? Home Appraisal Checklist

The appraiser’s job is to assign a total, fair market value to the property. In order to do this, they need to look for certain things that can affect the price or impact the lender’s decision to loan you money for the home. These tend to include:

• Health and safety hazards

• Structural integrity of the home

• The condition of the home

• Upgrades or improvements

• Visible defects

• Any conditions set by the lender


Appraisers can order any inspections they feel are necessary, such as a roof, pest or water inspection, if there are signs of potential issues. If the appraisal or inspection finds any conditions that don’t meet the lender’s requirements, they’ll have to be corrected before you can move in.


Exterior Checklist

Here are a few things the appraiser looks at on the outside of the home:

• Total land area or acreage of your property

• Condition of the roof and foundation

• Condition of the chimney

• Condition and type of driveway surface

• Home’s curb appeal

• Quality of the landscaping

• Condition of the pool, if there is one

• Type of garage

• Home’s structural integrity


Interior Checklist

You can expect the appraiser to look at these things when they inspect the inside of the home:

• Amount of livable space

• Number of bathrooms and bedrooms

• Working AC system

• Type of basement or crawl space

• Built-in appliance upgrades

• Any lead or peeling paint, but only if the house was built prior to 2000

• Quality of the electrical and plumbing

• Material and conditions of the walls, floors and windows

• Evidence of termites or pests

• Energy-efficient features

• General upkeep of the home

• Permanent upgrades


Keep in mind the appraiser will not consider moveable objects in their assessment. Anything that isn’t nailed down is considered personal property that you can take with you when you move. It isn’t considered a part of the home.

There are also certain rooms the appraiser may exclude from their measurement of livable space or bedroom count. For example, basements and garages are typically not included in the square footage of the home and a room must have a closet and window to be considered a bedroom.



How To Prepare For Your Appraisal

In addition to checking the exterior and interior condition of the home, the appraiser will also look for anything needing repairs. Here are some areas to consider addressing before your appraisal:

• Check your electric garage door opener to make sure it’s working

• Secure a handrail on steps or stairwells

• Secure second-floor doors with decks

• Secure a railing to any and all raised decks

• Ensure all utilities are functional with no safety issues

• Ensure water, electricity and air conditioning are functional

• Take care of any plumbing issues, roof leaks or stains

• Check for cracks in the walls, ceiling or foundation

• Check for water intrusion through the foundation

• Ensure your roof is sound and has at least 3 years of economic life remaining


This is by no means a complete checklist of repairs that might need to be addressed before a home appraisal. It is, however, a list of the most common issues that may arise either before or during the appraisal inspection. By addressing any repairs or upgrades before the appraisal inspection, you’ll be better equipped for a smooth home buying process and possibly a higher home value.



Your Home’s Appearance

Curb appeal can impact a home’s value, so it’s considered in the appraisal. In fact, the overall appearance of your home can affect the final appraisal value. A home that looks like it’s been taken care of may have a positive effect on the appraiser’s opinion of the condition of the home.

If the appearance of the home makes the appraiser feel welcome, comfortable or any other positive emotion, they may actually subconsciously put a higher value on the home. On the other hand, if they are put off by the home’s appearance or find it cold and unwelcoming, they may assign a lower value to the home.

To avoid the latter, follow these tips for improving the appearance of your home before an appraisal:

• Mow your lawn, trim bushes, rake the leaves or shovel the pavement to create a clean – and safe – appearance.

• Plant new flowers, lay new mulch and touch up outside paint to quickly update the exterior.

• Add soft touches to the interior decor with blankets or plush throw pillows to add a hint of comfort.

• Declutter the home. Even if it doesn’t change the physical measurements of the home, decluttering can make a room feel bigger and more usable.

• Replace such hardware as drawer handles and doorknobs to add more shine.

• Set your thermostat to a comfortable temperature to increase comfort and showcase how the heating or cooling works.

• Remove any off-putting odors, including garbage, items in the fridge, cooking, dirty laundry or pets.

• Clean the home to make sure the appraisers are seeing every feature in its best light.



Understanding Appraisal Values

An appraisal can make or break a home sale. It can move you to the next step in the home buying process or take you back to the negotiation table. Read on to learn what it means when you get an appraisal value that’s different than expected, and what to do.


What Happens When A Home Appraisal Comes Back Higher Than Expected?

When the appraisal comes back higher than expected, it greatly benefits the home buyer. That’s because they’ll be getting a good deal on the home and have more home equity.

For example, if the buyer and seller agree on a purchase price of GHS150,000 and the home is appraised for GHS165,000, the buyer still purchases the home for GHS150,000 and automatically moves in with at least GHS15,000 of equity in the home. And, since the lender will be loaning at or less than what the home is worth, the process can continue toward the closing table.

The seller will not be made aware if the home appraised for higher than the asking price. That way, they can’t try to demand more money (which would be in breach of the purchase agreement) or back out of the deal to sell the home for more later.

The seller will only know the results of the home appraisal if it comes in lower than expected, because it could affect the sale of the home.



What Happens If The Home Appraisal Comes Back Low?

A low appraisal can prevent the loan from moving forward or slow down the process because the lender cannot lend more money than the home is worth. This can be a problem if any of the parties involved are relying on mortgage financing.

If the appraisal comes back low, don’t panic just yet. You may have a few different options, whether you’re buying, selling or refinancing. Here’s what you can do:

• If you’re buying the home, you can try to negotiate with the sellers to decrease the price at or near the appraised value.

• As a buyer, you can pay the difference between the appraisal and the selling price out-of-pocket.

• If you’re a buyer, you may choose to walk away from the deal and keep your eye on the house in case the price drops. The owner may have trouble selling the home at a higher price than the appraised value and may drop the price or come back to renegotiate with you.

• If you’re the seller, you can dispute the valuation or get the buyer to ask for a second appraisal or appraisal review and hope for the best.

• If you’re doing a cash-out refinance, you might be able to lower the loan amount and take less cash out of your home.



Why Might A Home Appraisal Come Back Lower Than Expected?

Plain and simple, a home appraisal may come back lower than expected because the home isn’t actually worth what the sellers are asking. There are several other reasons an appraisal may come in low:

• Bad or outdated comparables (comps)

• A lack of comps

• An inexperienced appraiser

• Home improvements that didn’t add as much value as originally thought

• Unrealistic expectations of the seller or real estate agent


Sometimes, people make home renovations that they think will increase the value of their home. However, there are certain features and upgrades that add more value and some that don’t.

A pool is a great example of this. Say an appraiser compares your home to other similar homes in the area; if your home is the only three-bedroom with a new pool, there’s nothing to compare it to. That means the pool doesn’t actually add to your home’s value. In other instances, the pool could actually make it harder to sell your home or decrease the value because potential buyers see it as more of a burden than a luxury. Some people don’t want to deal with the time and money required to properly run and maintain a pool.



The Next Steps After A Home Appraisal

After your home appraisal is complete, the appraiser will assign a monetary value to the property based on the findings in the inspection and comparables in your area, and then send their findings to the mortgage lender.

Your loan amount will be based on the number that the appraiser assigns to the property, so if they say the home is worth GHS190,000, your lender will only loan that exact amount, minus any required down payment. This is unfortunate for the seller if they have the home listed at a higher price, as the lower home appraisal will affect their chances of getting that amount on the sale of their property.

However, if the home is appraised at or above the asking price, the loan will be processed and you will be able to begin closing on your home.


Related Pages

• No Upfront Fees

• No Deposit Mortgages

• How We Operate

• Why Choose Us

• Eligibility Requirements

• Affordability Checks


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