A home appraisal is a critical step in the home buying, selling, or refinancing process, providing an unbiased estimate of a property’s fair market value. Here’s what typically happens during a home appraisal:
1. Initiation and Scheduling
The appraisal is usually ordered by the lender after a buyer and seller agree on a purchase price or when a homeowner seeks to refinance.The lender selects a licensed, independent appraiser, who then schedules a visit with the homeowner or seller.2. On-Site Inspection
For an assignment with an on-site inspection, the appraiser observes the areas included in the agreed scope.During the inspection, the appraiser looks at:The home’s size (square footage), number of bedrooms and bathrooms, and overall layout.Visible condition of the home, including roof, foundation and major system features.Quality of finishes and upgrades, such as flooring, countertops, appliances, and recent renovations.Curb appeal and landscaping.Presence and condition of amenities like garages, pools, patios, or accessory dwelling units.The appraiser takes photographs and measurements to document the property’s features and condition.3. Market Analysis
After the inspection, the appraiser researches recent sales of comparable homes (“comps”) in the area, adjusting for differences in features, size, and condition.The appraiser may use different valuation methods, such as the sales comparison approach (most common), or a cost-based approach (estimating what it would cost to rebuild the home).4. Appraisal Report Preparation
The appraiser compiles their findings and analysis into a detailed appraisal report.The report includes:The estimated market value of the home.A description of the property and its condition.Data and rationale for the valuation, including details on comparable properties used for comparison.Confirm report delivery arrangements with the lender or client handling the assignment.5. Impact and Next Steps
If the conclusion differs from the contract price, discuss the implications with the lender or adviser handling the transaction.For refinancing, ask the lender how the appraisal affects its decision.Key Points to Remember
The appraiser is an independent, licensed professional whose job is to provide an objective opinion of value.Home appraisals are not the same as home inspections; inspections focus on identifying specific repairs or issues, while appraisals focus on value.Summary Table: Home Appraisal Process
| Step | What Happens |
|---|
| Scheduling | Lender orders appraisal; appraiser schedules visit |
| On-site Inspection | Appraiser inspects interior/exterior, documents features/condition |
| Market Analysis | Researches comparable sales, analyzes market data |
| Report Preparation | Compiles findings, assigns value, delivers report |
| Outcome | Value impacts loan approval, sale price negotiations, or refinance |