Definition - What does Appraisal Fee mean?
Prior to lending money to purchase a home, business, or property, the lending company will require an appraisal, which is the process to determine the actual value of the purchase. The appraised value is considered the real value of the home or property, which could vary from the price negotiated between the buyer and seller or from the real estate agent’s listed price.
The appraisal fee is the amount that the appraiser will charge for completing the appraisal. The appraisal fee is generally paid by the home or property buyer and may cost anywhere from $250 to $650.
Justipedia explains Appraisal Fee
After a buyer pays the appraisal fee, a professional home appraiser reviews the value of the home by comparing it to other properties in the area and their recent price at the time of sale. This can be done by reviewing MLS listings in the area and by reviewing public records.
Other factors that the appraiser will review include the condition of the home and any improvements made to the property. The appraiser may also review rental units in the area to determine the amount of income that the home could be generated if it were a rental unit.
Finally, the appraiser will perform an on-site inspection of the home reviewing any updates, the quality of the house, and whether the home needs any major repairs. Pictures of the property are also part of the appraisal process.
Although the appraisal fee may be expensive and may seem unnecessary, especially if you already negotiated what you believed was a fair price for the home, lenders requires a neutral, third-party expert to determine the value of a home because an appraiser is unbiased and does not have a vested interest in the negotiation or purchase of the home.