A Buyer’s Guide To Home Appraisal
Feb 28, 2021
A Buyer’s Guide To Home Appraisal
If you plan to buy a home, you might be surprised to learn that your lender will be conducting an independent appraisal of the home you’ve picked. It’s not enough for them to go off the home’s list or sale price on faith alone. And that makes sense. After all, the home is the bank’s collateral for the life of the loan. It’s particularly important in New York City, where home values within the same building, street, or neighborhood can vary widely.
Here’s what happens in a home appraisal
Appraising a home, particularly in New York City, is not simple. Similar apartments just a few blocks from one another can have very different values. The floor that a home is on, the kind of view or light it gets — each factor contributes to its value. The best appraisers are intimately familiar with the neighborhoods they work in.
Here are some of the things they’ll be looking at during a home appraisal:
- If it’s a co-op, the building’s financials will come under scrutiny (your agent should already have an idea if the Board is in a good position, so you’re not going into this part blind.
- Generally, the higher in a building you go, the higher the value.
- Square footage
- Quantity of beds and baths
- Age and condition of the home
- Neighborhood home comps
- Home’s materials
New York City home appraisals may also factor in things that are commonly desired but not a given, like central air, doorman building, laundry in unit, or proximity to green space or the subway.
Something the appraiser is not likely looking at too closely? Cherry-on-top offerings like high-end finishes, or nicer than average appliances. Stainless steel fridge? Great. Sub-Zero? Surprisingly, it won’t make much difference. As the buyer though, that can work in your favor.
What’s the difference between a home inspection and home appraisal?
Inspections and appraisals are both critical to the home-buying process but they serve different purposes and different parties. While you’ll need both, an inspection is something that should be completed prior to putting an offer in because you want to ensure you’re aware of any issues (and want to take them on) and so that any needed repairs are taken care of before purchase by the owner, or reflected in a lower bid so you have the cash to take care of them later. An appraisal is the bank or lender’s process for independently determining the value of their collateral. Ugh, it’s a lousy way of looking at it but it’s the reality of real estate.
How much does a home appraisal cost in New York City?
You can expect to pay between $300-$500 for a single-family home appraisal in Brooklyn (that goes for free-standing homes or condos and co-ops). If you’re buying a multi-family, the cost will go up but not outrageously so. Generally, the buyer pays for the cost of the appraisal as part of their closing costs, but you can choose to pay out of pocket at the time of the appraisal if you wish.
What happens after a home appraisal?
Use the home appraisal to your advantage. You have the right to see and retain a copy of the appraisal report before closing. Typically, the window is small—three days is common—but if the home is valued lower than you expected, you may have some wiggle room when it comes to adjusting a too-high offer. Tread carefully, though, and let your agent explain the pros and cons of negotiation. If all goes well, expect to close on your piece of Brooklyn shortly after the process is complete.