How Much Are Real Estate Appraisal Fees

How Much Do Appraisal Cost

This question about ‘how much are appraisal fees?’ shows up again and again, as many new home buyers and refinancing customers, face the same dilemma while shopping for and appraisal offer – How much does the appraiser cost?

Unfortunately the answer is  more complex than x dollar per square foot. But there are some guidelines which can help you determine how much to pay for an appraisal report.

Who Needs a Real Estate Appraisal Report

The real estate appraisal report is very important part in the process of buying a home. The lender or the bank usually needs the appraisal report to decide how much money they are willing to lend. The buyer and borrower needs the appraisal report to know who much they will be granted to borrow, and get a third party evaluation of the price they are about to pay for the property.

The only side that would be happy to skip this real estate report is the seller… in case the appraisal report is significantly lower than the price agreed by the buyer, the buyer might walk away from the deal or ask to reopen the negotiation.

There is another option when the real estate appraisal is lower than the price agreed, that the buyer will pay the seller the delta left between the price and the report, as cash payment excluded from the mortgage.

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How Much ‘Drive By Appraisal’ Cost

This kind of appraisal is the cheapest appraisal you may find, this is usually made by the buyer who wishes to have some kind of estimation on the up coming home purchase. The drive by appraisal is not as it seem only ‘drive by’ but rather when the appraisers uses only public record and searches open sources for their information. Appraisers may check for court records or a multiple listing service record to obtain the age, size, and other characteristics of your home.

In the report from a drive by appraisal you can expect location map, floor sketch, color photos of the property and neighborhood, with some comparable, and Statement of Living Conditions. These drive by appraisals fees may cost around $150-$250, depending on the state, region, and distance needed to be covered.

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How Much an FHA Appraisal Cost

The FHA require a real estate appraisal check evaluation prior to any home loan processing. The FHA  will not insure or guaranty a loan amount for more than the reasonable market value of the property. This means that no loan will be approved without an appraisal evaluation on how much does the property worth.

The FHA may add some approved costs to the home loan like energy-efficient upgrades and other items approved by the FHA.

According to the FHA requirements 2011, only a FHA-approved professional can give the appraisal report for the home the loan is requested for. But even though the FHA points to specific professional, it leaves the changes and fees to be discussed between the buyer and the appraiser either an independent appraiser or Appraisal Management Company (AMC).

One rule that the FHA do state clearly is that the fee should not reflect any of the outcome figure, as it might be tempting to both sides (buyer/appraiser) to pay more and receive more fees as long as the evaluation is inflated or undervalued than the real home market value.

You should know that the FHA takes the evaluation very seriously and states that lenders are prohibited from allowing commissioned staff (which have a financial bonus when the deal closes) to hire FHA appraisers. There is a risk that they might try and manipulate in non legal ways the appraisal report (over evaluate or under estimate) or pay the appraisers ‘under the table’ to tamper with their judgment.

Even though the FHA does not require the use of AMCs (Appraisal Management Companies) some lenders actually do prefer to hire them in the appraisal process, to eliminate the direct difficulties and report manipulations mentioned concerning the FHA appraisal expert hiring.

Exactly for this reason the FHA should not be paid by the lender, no buyer would believe that the lender has no influence on the appraisal process if the lender was the side paying the fee. That would certainly have appearance of impropriety. So it is the buyer who pays the appraisal fees, which are added to the loan.

So how much a FHA appraisal cost? It may vary between $300-$350 depending on location and appraiser.

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How Much Does a VA Appraisal Cost?

Just like the process with the FHA loans, the when a VA loan is required, the buyer must ask for an appraisal report evaluating the property he/she are about to buy and this needs to be done before the loan can be processed.

The appraiser must be a VA assigned appraiser, he will come and do the evaluation and estimation of the home market value and will prepare all the nessesery reports which he then submits to the Department of Veterans Affairs.

The department of veterans affairs does not have a fix price for the VA appraisal costs, so many veterans ask how much does real estate appraisal cost? Just like the FHA appraisals this is left for the market to decide, but with one important difference, there is a VA appraisal fee limit.

In each area there is a VA regional loan center, it is up to them to decide on timetable, documentation requests and.. how much the VA appraisal will cost.

You can see here the VA regional centers by state and see the  maximum allowable fees for the appraisal type and the number of days allowed for completion. The VA real estate appraisal cost vary from state to state, for example $475-$600 at California, or $450-$550 at Texas (from single family to 4 family), and in some places they are also eligible for added costs for mileage as an expense.

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