Understanding the Home Appraisal Process

Whether you’re a first-time homebuyer, a seasoned real estate investor, or a homeowner looking to refinance, understanding the home appraisal process is crucial.

This comprehensive guide will walk you through the ins and outs of home appraisals, providing valuable insights and tips to help you navigate this essential step in the real estate journey.

What is a Home Appraisal?

A home appraisal is an unbiased, professional assessment of a property’s value. It’s conducted by a licensed appraiser who evaluates various factors, such as the home’s condition, location, and comparable sales in the area. The primary purpose of a home appraisal is to ensure that the property’s value aligns with the purchase price or refinance amount, protecting both the buyer and the lender.

Why is a Home Appraisal Important?

Home appraisals serve several essential functions in the real estate process:

  • Protecting the buyer: An appraisal helps ensure that the buyer isn’t overpaying for a property.
  • Protecting the lender: Lenders use appraisals to confirm that the property’s value supports the loan amount. If the appraisal comes in lower than the loan amount, the lender may decline the loan or require the buyer to make up the difference.
  • Refinancing: When refinancing a mortgage, an appraisal helps determine the home’s current value, which impacts the new loan amount and terms.
  • Property tax assessments: Appraisals can also be used to contest property tax assessments, potentially lowering your tax bill.

How is a Home Appraisal Conducted?

The home appraisal process typically involves the following steps:

1. Selecting an Appraiser

The lender usually selects the appraiser, ensuring an unbiased evaluation. Appraisers must be licensed or certified in the state where the property is located and adhere to the Uniform Standards of Professional Appraisal Practice (USPAP).

2. Property Inspection

The appraiser visits the property to assess its condition, size, and features. They’ll take note of any necessary repairs, upgrades, or improvements that could impact the home’s value.

3. Comparing Comparable Sales

Appraisers research recent sales of similar properties in the area, known as “comparables” or “comps.” They’ll consider factors such as location, size, age, and condition to determine a fair market value for the subject property.

4. Final Appraisal Report

After completing the inspection and research, the appraiser compiles their findings into a final appraisal report. This report includes a detailed description of the property, the appraiser’s methodology, and the final appraised value.

Factors That Impact a Home’s Appraised Value

Several factors can influence a home’s appraised value, including:

  • Location: Proximity to schools, shopping centers, and other amenities can impact a property’s value.
  • Size and layout: Larger homes with more bedrooms and bathrooms typically have higher values.
  • Age and condition: Newer homes in good condition generally appraise for more than older, outdated properties.
  • Upgrades and improvements: Renovations and updates can increase a home’s value, but not all improvements have the same impact. For example, kitchen and bathroom remodels typically yield higher returns than other projects.
  • Market conditions: Local real estate trends, such as supply and demand, can affect a property’s value.

What to Do If the Appraisal Comes in Low

If the appraisal comes in lower than the purchase price or refinance amount, you have several options:

  • Negotiate a lower price: If you’re buying a home, you can ask the seller to lower the price to match the appraised value.
  • Challenge the appraisal: If you believe the appraisal is inaccurate, you can request a review or order a second appraisal.
  • Make up the difference: If you’re committed to the property, you can make up the difference between the appraised value and the purchase price or loan amount with additional cash.
  • Walk away: If you’re unable to reach an agreement with the seller or lender, you can walk away from the deal, provided your contract includes an appraisal contingency.

Preparing for a Home Appraisal

To ensure a smooth appraisal process, consider the following tips:

  • Make necessary repairs: Address any safety hazards or major issues before the appraisal.
  • Clean and declutter: A clean, well-maintained home can make a positive impression on the appraiser.
  • Provide documentation: Provide the appraiser with any relevant documents, such as permits for recent renovations or a list of comparable sales in the area.
  • Be available: Make sure you or your real estate agent is available to answer any questions the appraiser may have during the inspection.


Understanding the home appraisal process is essential for real estate investors, homeowners, first-time homebuyers, and real estate agents alike. By familiarizing yourself with the steps involved, the factors that impact a property’s value, and how to prepare for an appraisal, you’ll be better equipped to navigate this critical aspect of the real estate journey.

Remember, a well-informed buyer or seller is more likely to achieve a successful outcome in any real estate transaction.

Kurby Team

The Kurby Content Team is a diverse group of seasoned real estate experts dedicated to providing insightful, reliable information for homebuyers, real estate investors, and real estate agents. With backgrounds ranging from real estate brokerage, property investment, and residential home buying, our team combines decades of experience with a passion for demystifying the real estate world. We at Kurby are committed to helping you make informed, successful real estate decisions. Whether you're a first-time homebuyer, a seasoned investor, or a real estate professional, count on the Kurby Content Team to deliver the most relevant, actionable real estate content you need.