What is the purpose of a home appraisal?

A home appraisal is a required part of the mortgage process that serves to establish that the value of the home will be sufficient collateral for the amount of the loan. Appraisal fees vary by appraiser, but generally cost between $300 and $500, which is typically paid upfront by the home's buyer or owner (for a refinance). A home appraisal is done by an independent appraiser who will visit your home and inspect the interior and exterior. However, the appraiser is not performing the same service as a home inspection. A home inspector checks the working order and condition of a home and its utilities, whereas an appraiser evaluates the home in its current condition for its marketability. Generally, home improvements or the cleanliness of the interior will not add to or diminish the appraised value. The appraiser considers many other factors, beyond their inspection, to establish the fair market value, such as comparable values, historic sales and market demand for that area. Market ...  more