The Important Detail That Makes a Refinance Appraisal Different from a Purchase Appraisal

You already know that a purchase appraisal differs from a refinance appraisal in that the former is needed when you are buying a house and the latter when you want to refinance a house you already own. Given that in either case, it is the bank or financial institution that requires the appraisal, you could be forgiven for assuming the two are interchangeable. In fact, a purchase appraisal and refinance appraisal differ not only in name but in the way they are conducted. Accordingly, one cannot stand-in for the other and the qualifications you want to look for in an appraiser differ depending on the type of appraisal performed.

The Purchase Appraisal

When performing a home appraisal for the purpose of sale, an appraiser considers both comparable houses that have sold in the area and the purchase contract that has been prepared. In addition, a purchase appraisal considers the seller’s target value as they know the success of the sale hinges on their determination.

The Refinance Appraisal

In contrast to the above, when performing a home appraisal for refinance, an appraiser doesn’t have access to any information beyond the home itself and similar homes that have sold in the area. With no seller present and no purchase contract to use as a reference, the refinance appraiser goes in blind and must make a determination based only on what they see.

What Goes into a House Appraisal?

The short answer is a lot. To begin, internal aspects of the house are considered, including square footage, the number of bathrooms and bedrooms, renovations or remodeling performed, details about the house’s foundation, whether a basement or attic exists, and what sort of materials were used in construction. In addition, an appraiser looks at the condition of the floors, walls, and windows as well as the foundation and roof. They will note damages big and small while also evaluating the general upkeep.

Further, a home appraisal takes external aspects into consideration, including characteristics of the neighborhood, zoning classifications, lot size, access to utilities and public services, and the type of vehicle storage provided. After all, a double garage is a big plus in both cold and hot climates, and a paved driveway goes a long way in reducing maintenance costs and improving curb appeal.

Choosing an Appraiser

When commissioning a home appraisal for refinance, it is crucial that the appraiser has intimate knowledge and ample experience in your area. Ultimately, neighborhoods are nuanced ecosystems, and all of their quirks cannot possibly be identified by someone without adequate local knowledge. A similar home down the block may have gone for far less than you hope yours would because of flood damage that is no longer visible. An appraiser familiar with your area’s history will catch this; one that isn’t might not. Such reasons make it worth paying for an experienced professional, even if doing so bumps the price of your appraisal up a little bit.