If you've ever bought or sold a home, you're probably familiar with a home appraisal. If you've never dealt with real estate (or you have but just nodded your head and smiled until the closing) hearing that term may result in your eyes getting that glazed over look. Home appraisals, to put it nicely, are BOOOOOORRRRIIINNNGG, but boy are they important! Basically, a home appraisal is a (very) educated guess as to how much a property is worth. Without appraisals, the real estate market just wouldn't exist. Without appraisals, financial institutions wouldn't know how much to lend a prospective buyer because they won't know what the loan collateral could sell for should something go wrong. What does that mean? Imagine for a second that you bought a home for $500,000 but could only sell it for $50,000; you wouldn't be thrilled. Well, that's exactly how financial institutions feel. They don't want to loan a buyer $500,000 for a home and only get $50,000 should a situation arise that they would need to sell it. We've come up with a few frequently asked questions to help you understand a little more about home appraisals.

When are they done?  Home appraisals are typically done after a contract is negotiated and signed. This can be a tricky situation, as an appraisal could cause a contract to fall apart should it come back wildly different from the agreed upon price. Most contracts include a contingency clause that if a property doesn't appraise well, it can be renegotiated, but always double check with your agent. You wouldn't want to be contractually obligated to buy a house that isn't worth what you're paying.

How long do they take? Since the housing bubble burst in the late 2000's, appraisals now usually take between 1-2 weeks.

Who pays for them? Normally the seller pays for the appraisal. The average price in South Carolina is around $310, but in Greenville the average price is around $280. You can go to www.appraisers.promatcher.com to see the average price where you live.

Isn't an appraisal and an inspection the same? It would seem so, but really they are very different. Both an appraiser and an inspector look around the house, but that's where the similarities end. An inspector looks at everything and determines if there are any defects or damages to the home that will cost the buyer later. An appraiser looks at everything and determines the value of the home. Deferred maintenance will most certainly affect the inspection, but an appraiser takes into account the home, the property, comparable homes, and more.

Is there anything (as a seller) you can do? Once the appraisal process starts, there's not really anything a seller can do to help. That's not to say there's nothing they can do. Before an appraiser visits your home, tidy up. No, an un-vacuumed rug isn't going to alter an appraisal, but you want the appraiser to see your homes full potential. Another helpful tactic is to make a list of all renovations or repairs you have done to the home. It may not matter a bit, but you'd rather leave that decision up to the appraiser.

What happens if you get a super low appraisal? As a buyer, if the appraisal comes back significantly lower than the contract price, something needs to change. A lender isn't going to loan more than the appraisal, so if your contract has a contingency clause, a renegotiation is likely to be in your future, or you may decide to walk away altogether. As a seller, you may decide to get a second opinion. If the low number is based on needed repairs and maintenance, you may be able to fix whatever's needed if the appraiser is willing to take a second look. Most likely though, you will need to adjust your expectations and renegotiate the contract.

Yes, appraisals can be a pain in your behind, but it's one of the most important steps in the home buying/selling process. It protects both the buyer and the seller, and keeps the entire real estate market in check.