How Long Does An Appraisal Take? What Should I Expect As A Buyer?

What goes down during the appraisal?

There are three key components to the home appraisal report: The physical inspection, the comparable sales selection (typically), and the evaluation of data.

Physical inspection

This is where the appraiser will examine the actual property. They will then identify the condition as average, good, fair, or poor, which will impact the home’s value.

Selecting comparable sales, or comps

Most appraisers base their evaluation on so-called comps to appraise the home. The examiner will look at recent sales of similar, nearby properties, usually sold within the last year, to establish a reasonable cost for the home.

What makes a house comparable?

Multiple factors go into determining what makes a comparable house for purposes of the analysis. These include:

• How recent the sale was: Comps that have sold within the last 60 days are ideal because they will best reflect current market conditions. However, recent sales aren’t always available, so comps may come from earlier sales up to a year or so.
• How close it was to the subject property: Of course, real estate pricing is all about location, location, location!
• Square footage and lot size: This includes details like the number of bedrooms, number of bathrooms, layout, and footprint.
• Similar home style and age: Comparable homes will ideally have similar styles, amenities like garages and pools, and be built as close to the same year as possible.
• Condition: Appraisers will seek comps with similar levels of upgrades and repairs.

Evaluation of data

The appraisal report takes into account as many nuances and subtleties as possible. For instance, there may be some regression analytics involved in calculating exactly how much that house is worth if, for instance, all the recently sold homes have four bedrooms and your house has three. The appraiser isn’t just going to simply double the square footage of a comp that’s half the size of your house. And if an appraiser can’t find any similar homes priced as high, that could be a sign that the one you’re eyeing is overpriced.

In the end, the report will show detailed adjustments to the comparable sales to determine the home’s value, typically in about 10 pages or less.

The income method of appraisal

Another approach to appraisals is known as the income method. This is used for commercial, investment, and Airbnb properties — any property where the primary value is in its ability to generate income.

Instead of comparables, the income method uses a combination of both the net income generated by the home along with additional factors to determine its ultimate worth.

How long will the home appraisal take?

Depending on the size of the home and the current housing market, an appraisal can take anywhere from a few days to a few weeks, according to Tom Cullen of Cullen Real Estate and Appraisal Company, an appraiser for more than 30 years.

Maria Raymer, a top-selling agent in the Jacksonville, Florida region, cites a similar timeline, recommending that buyers expect “at least a couple of weeks from the time it’s ordered until it’s received back to the bank.”

Typically, your appraisal should be ready a week or two after it’s ordered.

Why would an appraisal take longer?

Appraisals can take longer than that estimated timeline under certain circumstances. For instance, if the house is a high-end or specialty property, you may need to wait longer for an appraiser who’s qualified to evaluate it.

And when mortgage rates are lower, lots of people want to refinance, which requires an appraisal. And that can back things up.

“A busy, active market can slow the turnaround time,” Raymer says.

Aaron M. Adler, owner of Appraisals Unlimited, Inc., echoes that sentiment. He says that during the pandemic housing boom, when mortgage rates were at historic lows, there was a “massive demand for home appraisals.”

The volume of home appraisals declined in 2023 due to high mortgage rates and dwindling home sales; however, other factors are contributing to delayed inspections.

“Like so many other industries right now, the appraisal industry is suffering from a labor shortage,” notes Adler. “More than 60% of appraisers are over the age of 50, and many studies cite the average age of appraisers as being closer to 60. Attracting new talent has been more difficult than expected. Not only is the industry guarded by stringent government regulations and certification requirements, but the National Association of Realtors® (NAR) also concludes that lack of training and a downward trend in compensation are also prohibitive factors in attracting new talent.”

Adler says he’d “like to see the industry do a better job of leveraging technology to improve the efficiency and accuracy of home appraisals. This could help attract a younger generation of appraisers to the industry, and play a role in reversing the labor shortage.”

Under typical circumstances, here’s a general timeline of what to expect.

The lender will order the appraisal

After the house is under contract, the lender will typically order the appraisal through a third-party appraisal management company (AMC) for an unbiased opinion. According to Cullen, appraisers will typically respond within 48 hours of being contacted.

The response time also depends on the current housing market and interest rates. “When interest rates are higher, you can get the appraisal back in a matter of days. So it can be a matter of days to weeks, depending on the market conditions,” Cullen says.

Different loans can make the response time longer as well, Daniels says. For example, if there is an influx of VA and FHA loans, the appraisal time for those specific loans can be longer as opposed to a conventional loan.

The appraiser will visit the house

Once you set up a time, the appraiser will stop by the property and look at the interior and exterior of the home, noting physical attributes, quality, amenities, size, and any extra features. Depending on the size of a home, it can take an appraiser anywhere between 15 minutes and a few hours to walk through entirely.

They’ll also ask the broker about whether improvements have been made or if there are any repairs they should include in their valuation.

These questions and observations help the appraiser fill out the Uniform Residential Appraisal Report. The form asks for information about contracts, improvements, neighborhood characteristics, housing trends in the area, available utilities, measurements, number and types of rooms, property condition, and whether the property fits with the surrounding neighborhood.

This information will give them what they need to identify comparable sales. Here’s a sampling of what you’ll see in a typical appraisal report:

The physical inspection can take anywhere between 15 minutes and several hours, depending on the size and condition of the home.

For example, a cleaner home is generally easier for the appraiser to work through and assess than a cluttered one. It will also take more time for an appraiser to walk through each room in a larger home.

The appraiser will look for comparables

Now that the appraiser has a handle on what they call the “subject property” (your house), they’re going to verify data from municipal records about the age of the home and lot size before performing a comparable sales analysis.

While searching for comparable sales, the appraiser is looking for the most recent, most proximate (nearby geographically), and the most similar properties that are sold to get a good grasp of what the home’s value is.

This typically shouldn’t take too long (thanks to appraisal software), but it can be difficult to find comparable properties for more unique homes. For example, a cookie-cutter subdivision home will likely be easier to match than a waterfront home with several bedrooms.

“There’s going to be a range because some are really simple, there’s a lot of data available, but for some unique properties, you’re going to have to search hard — go to other communities, other towns, sometimes different states,” Cullen says.

“It can take anywhere from hours to days to locate truly similar comparables.”

The appraiser will prepare the report

The appraiser will then use all the information gathered from the physical examination and the comparable sales to develop the appraisal report, which is approximately 10 pages long for residential lots.

The report traditionally consists of local comparable properties, the appraised value, how the appraiser determined the value, and what factors the appraiser took into consideration. Cullen says appraisers will use either a cost approach (the price the home was previously listed at), an income approach (how much it can be rented for), a sales comparison analysis (using comps, as described above), or a combination of all three to determine the home’s value.

While shorter forms can be done in as little as six hours, depending on the appraiser’s workload and the complexity of the home, the appraiser should have the report completed in less than a week.

Generally, from the time the lender orders it, you can expect to see an appraisal report anytime between six and 20 days after the process begins. But if the market is particularly busy, it can take up to two weeks for it to end up in the lender’s hands.

Note that the whole appraisal process can take longer for an FHA loan or a VA loan: These are government-backed loans, and they require borrowers and homes alike to meet certain criteria. Therefore, the property must be appraised by an FHA-approved professional as part of the process, which can sometimes add to the timeline.

In the past, we’ve been able to get the seller to come down to meet the appraised value, now that they know what it is.

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So you have the appraisal report. Now what?

If the appraised value is about the same as your offer, it’s time to close on your dream home. Congratulations!

But what if the appraisal comes in high or low?

“If it comes in high, it doesn’t change anything,” Raymer explains. “Obviously, the buyer is happy — that’s a nice thing.”

On the other hand, if the appraisal is lower than your offer, it could be an opportunity for you to renegotiate the sales price with the seller — or you may have to make up the difference in cost.

“If the appraisal comes in low, that can create problems because many times the buyer would have to put the difference down in cash,” Raymer says.

Daniels says he sees buyers cover up to $10,000 of the home cost, or meeting the seller halfway.

But the specific tenor of this negotiation has to do with the strength of the market, Raymer explains: “In the past, we’ve been able to get the seller to come down to meet the appraised value, now that they know what it is,” she says. In a seller’s market, some people even waive appraisals altogether.

As of May 2024, 20% of buyers waived the appraisal contingency, according to NAR.

If you can’t strike a deal, you, as the buyer, can still back out of the purchase contract and get the earnest money you initially deposited back. This is the function of an appraisal contingency, a common clause in real estate contracts that protects the buyer if the appraisal falls short of the offer amount. Additionally, loans through the VA or FHA have protections that state if the home doesn’t appraise for any reason, the buyer can get their earnest money back, according to Daniels.

“If it doesn’t come to terms, as long as it’s terminated by the appraisal objection date, then the buyer gets their earnest money back, and it’s back to the drawing board.”

Header Image Source: (Veri Ivanova / Unsplash)