The Home Appraisal Process: A Checklist for Homebuyers and Sellers

Buying or selling a home involves plenty of moving parts, and the home appraisal process is one step that can raise questions for both buyers and sellers. What does an appraiser look at? How long does an appraisal take? And what happens after the appraiser finishes the inspection? 

Whether you’re buying or selling in Dumfries, VA, Tampa, FL, or another market, understanding the home appraisal process can help you know what to expect. An appraisal provides an independent opinion of a property’s market value and can play an important role in the mortgage process.

What is a home appraisal?

A home appraisal is an assessment of a property’s current market value completed by a licensed or certified real estate appraiser. When a buyer is financing a home with a mortgage, the mortgage lender typically orders the appraisal to help determine whether the property provides enough collateral for the loan.

An appraisal may also be required when refinancing a mortgage or applying for certain types of home equity financing.

Unlike a home inspection, which focuses on identifying potential problems and evaluating the home’s condition, an appraisal is primarily concerned with determining the property’s market value. To do this, the appraiser considers the home’s characteristics, condition, location, and recent sales of similar properties.

What happens during the home appraisal process? 

The home appraisal process generally involves an on-site visit followed by research and analysis. While the exact process can vary depending on the property and assignment, here’s what homeowners can generally expect. 

Visits your property

The appraisal typically begins with an inspection of the property. The appraiser observes and documents the home’s interior and exterior, takes measurements and photographs, and notes features that may affect its value.

The length of the visit can vary based on the home’s size, condition, and complexity. A larger or more unique property may require more time than a smaller, more straightforward home.

Evaluates your home

During the property visit, the appraiser looks at the home’s overall condition, size, layout, features, and permanent improvements. This can include the number of bedrooms and bathrooms, finished living space, garage, foundation, roof, heating and cooling systems, and other significant components.

The appraiser may also note visible signs of deferred maintenance, damage, or other conditions that could affect the property’s value or marketability.

Outside the home, the appraiser may evaluate the lot, driveway, garage, landscaping, exterior condition, and permanent features such as a deck, porch, or pool. The surrounding neighborhood and location are also considered as part of the valuation.

The goal isn’t to judge whether a home is decorated to a homeowner’s taste. Instead, the appraiser is gathering information that can help determine how the property compares with other homes in the market.

Researches comparable sales

After evaluating the property, the appraiser researches recent comparable sales, often called “comps.” These are recently sold homes that share relevant characteristics with the property being appraised.

Appraisers may consider similarities and differences in factors such as location, size, age, condition, layout, and features. Because no two homes are exactly alike, the appraiser analyzes those differences when determining how the comparable sales relate to the subject property.

Robert Surns, residential appraiser at Lakeshore Appraisal, explains, “Recent comparable sales provide evidence of what buyers are currently paying for similar homes. Appraisers analyze these sales to align the subject with current market activity and support a credible opinion of value.”

Recent sales are especially useful because they provide evidence of what buyers have actually been willing to pay in the current market.

Analyzes the market data

The appraiser then considers the information gathered during the property visit alongside the comparative market analysis.

The home’s location, condition, size, improvements, and features are considered together rather than in isolation. The appraiser uses this information to develop a supported opinion of the property’s current market value.

This is also why a home’s purchase price, a homeowner’s estimate of its value, or the amount spent on renovations doesn’t automatically determine its appraised value.

Completes the report

After completing the property evaluation and market analysis, the appraiser prepares the appraisal report. The report documents the property, comparable sales, relevant housing market information, and the appraiser’s final opinion of value.

The completed report is generally provided to the lender when the appraisal was ordered as part of a mortgage transaction.

Are home appraisals different for different types of loans? 

The general appraisal process is similar across many transactions, but some loan programs have additional property requirements.

FHA home appraisal 

FHA appraisals include additional requirements related to the property’s condition, health, safety, and structural soundness. An appraiser may identify issues that need to be addressed before the loan can move forward.

Potential concerns can include deteriorating paint, roof or foundation problems, water damage, exposed electrical components, or other conditions that may affect the property’s safety or structural integrity.

The specific requirements depend on the property and applicable FHA guidelines, so buyers and sellers should work with their lender if an issue is identified.

>>Read: What Are the Appraisal Requirements for Buying a Home with an FHA Loan?

VA home appraisal 

VA home loan purchases also have minimum property requirements designed to ensure the home is safe, sanitary, and structurally sound.

These requirements can include adequate heating, functional utilities, a sound roof and foundation, and other health and safety considerations.

If an issue is identified during the appraisal, the lender can explain what needs to happen before the loan can proceed.

What happens after the home appraisal is completed? 

Once the appraisal report is completed, the lender reviews the appraised value as part of the mortgage underwriting process.

If the appraised value meets or exceeds the purchase price, the transaction can generally continue toward closing as planned, assuming the buyer meets the lender’s other requirements.

If the appraisal comes in lower than the purchase price, however, the difference can create a financing challenge.

What information is included in a home appraisal report? 

A home appraisal report contains information that explains the property and supports the appraiser’s opinion of value. Depending on the type of appraisal, the report may include several key sections.

• Property and site information
• Neighborhood information
• Property improvements
• Comparable sales 
• Final opinion of value 

Understanding the home appraisal process

A home appraisal involves more than a quick walk-through of a property. The appraiser evaluates the home’s characteristics and condition, researches comparable sales, considers relevant market data, and uses that information to develop an opinion of the property’s current value.

For buyers, understanding the process can make this step of the mortgage process feel more straightforward. For sellers and homeowners, knowing what information may be useful and what the appraiser will evaluate can help the appointment go smoothly.

While you can’t control every factor that influences an appraisal, knowing what to expect can make one of the more technical parts of a real estate transaction easier to navigate.

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