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Understanding the California Home Appraisal Process

Summary: This article outlines the home appraisal process in California. It explains what the appraiser looks for, when the appraisal takes place, and the different outcomes that can occur.

If you’re planning to buy a home in California, and you need to use a mortgage loan to finance your purchase, you’ll probably go through the home appraisal process. This also applies to homeowners who want to refinance, in most cases.

But how does the process work? Who pays for it? And what is your role in this process, as a home buyer. Here’s what you should know about the appraisal process.

Related: California home buying process

The California Home Appraisal Process Explained

Here are some of the most frequently asked questions relating to residential real estate appraisals, from a buyer’s perspective:

What is a home appraisal?

It is a professional appraiser’s estimate of the current value of the property you are planning to buy. Appraisals are based on local market conditions, property features, and other factors that relate to value.

Is a home appraisal required in California?

If you’re using a mortgage loan to finance your purchase, the lender will probably require a home appraisal before issuing the loan. They do this to determine the current market value of the property, and to protect their investment. They want to ensure that the property is worth the amount being paid for it. (Actually, this protects both the borrower and the lender.)

How much does a home appraisal cost in California?

In California, appraisals usually range between $300 and $500, on average. The actual cost that you pay will vary based on the type and size of the property, the location, and other factors.

What happens during the home appraisal process?

The appraiser will evaluate local market conditions in the area where the home is located, paying particular attention to recent sales prices for similar homes. He or she will also visit and examine the property being purchased. The appraiser will consider any value-adding features such as a premium location, renovations and upgrades, etc.

Based on this evaluation, the California home appraiser will provide an estimate of the property’s current market value. This report will be delivered to the mortgage lender.

How does the appraiser decide what the home is worth?

Comparable sales play an important role in the California home appraisal process. These are similar homes that have sold recently in the same area as the property being appraised. They are commonly referred to as “comps” by industry professionals.

Appraisers usually look for houses that have sold within the last 90 days, within a mile of the appraisal home. They consider a variety of factors, such as:

  • Square footage
  • Number of bedrooms and bathrooms
  • Overall condition and appearance
  • Amenities, features and additions

What if the home appraises for less than the purchase price?

Sometimes a home will be appraised for an amount that’s less than what the buyer has agreed to pay. (This is what people mean when they say a house “didn’t meet appraisal” … or that the appraisal “came in low.”) As a home buyer, you have several options in this scenario.

In California, most home buyers include a contingency within their purchase agreement that the home must be appraised at the selling price or higher. This is known as an “appraisal contingency.” It essentially allows the buyer to back out of the transaction if the appraisal comes in lower than the sale price.

But it doesn’t have to come to that. In many cases, sellers are willing to reduce the sale price to match the appraised value. After all, everyone wants the deal to go through.

It’s also possible for the home buyer to put more money down, to cover the difference between the home appraisal value and the selling price.

This is where it pays to have an experienced California real estate agent helping you. A good agent can advise you on the best path forward, depending on the situation. But ultimately, it’s your choice.

Need a loan? We hope you’ve enjoyed this short guide to the California home appraisal process. If you have questions related to the mortgage side of all this, or if you’d like to receive a rate quote for a home loan, please let us know! Bridgepoint Funding has been helping borrowers in California for more than 16 years.

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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