Understanding a Home Appraisal

A home appraisal is a professional, third-party assessment of a property’s market value. It’s typically required by lenders during a home purchase or refinance to ensure the loan amount doesn’t exceed the value of the property.

A licensed or certified appraiser—who is neutral and independent—is hired by the lender (but paid for by the buyer or homeowner).

The appraiser examines:

• Comparable sales (recent sales of similar homes in the area)

• Condition of the home (maintenance, repairs, renovations)

• Size and layout (square footage, number of bedrooms/bathrooms)

• Location (neighborhood quality, proximity to schools, amenities, etc.)

• Market trends (local housing demand, price trends)

1. Inspection – The appraiser visits the home to document condition, layout, features, and upgrades.

2. Research – They review recent sales of comparable properties (comps).

3. Analysis & Valuation – Using this data, they calculate a fair market value.

4. Report Delivery – A formal appraisal report is sent to the lender (and you may request a copy).

• For Buyers: Ensures you’re not overpaying.

• For Sellers: Helps you price your home competitively.

• For Lenders: Confirms the property is adequate collateral for the loan.

• For Refinance: Determines how much equity you have access to.

• Renegotiate price with the seller

• Challenge the appraisal with better comps or evidence

• Bring more cash to cover the gap

• Cancel the deal (depending on contract terms)

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