What Happens During a Home Appraisal and Why It Matters

Whether buying, selling, or refinancing, understanding the home appraisal process is essential. It plays a key role in determining property value and influences decisions for buyers, sellers, and lenders alike.

This guide explains what takes place during an appraisal, why it's important, and how it affects a real estate transaction.

What Is a Home Appraisal?

A home appraisal is a professional, unbiased estimate of a property's fair market value. It is conducted by a licensed appraiser who evaluates the home’s condition, location, features, and comparable sales in the area to determine an accurate value.

An appraisal is often confused with a home inspection. However, the two serve different purposes. A home inspection evaluates the physical condition and systems of a home, while an appraisal focuses on determining its monetary value. Appraisals are typically required by mortgage lenders to ensure the loan amount does not exceed the property’s actual worth.

Why Home Appraisals Are Important in Real Estate

The appraisal serves several critical functions in a real estate transaction:

For buyers: Ensures the price being paid aligns with the home's value.
For sellers: Helps validate the asking price and can support negotiations.
For lenders: Confirms the house worth aligns with the amount being financed.
For refinancing: Determines if the homeowner has enough equity for a new loan or cash-out refinance.

Without a reliable appraisal, a transaction may face delays, renegotiations, or even cancellation.

What Happens During a Home Appraisal Process?

The home appraisal process typically involves several key steps:

Scheduling the Visit: Once an appraisal is ordered, a licensed appraiser contacts the appropriate party to schedule a walkthrough.
On-Site Inspection: During the visit, the appraiser examines the home’s interior and exterior. They take measurements, assess the layout, note recent upgrades, evaluate the condition, and capture photos of the property.
Market Research and Comparable Sales: The appraiser studies recent sales of similar properties in the same area, often referred to as “comps.” These are used as benchmarks for determining the subject property’s value.
Final Report Preparation: The findings are compiled into a detailed report, which includes the appraised value, property features, market data, and any relevant notes about the home’s condition.
Report Submission: The completed appraisal report is submitted to the lender or relevant party to support the next steps in the transaction.

What Factors Influence the Appraised Value of a Home?

Many elements are considered when determining a home’s appraised value, including:

Location: Desirability of the neighborhood, proximity to amenities, and overall area trends.
Square Footage and Layout: Total living area and the efficiency of the floor plan.
Condition of the Property: Structural integrity, age, and maintenance.
Renovations and Upgrades: Improvements such as updated kitchens, bathrooms, or energy-efficient systems can increase value.
Comparable Sales: Recently sold homes with similar features help anchor the valuation.
Market Conditions: The current real estate market climate and demand within the region.

Understanding these factors gives homeowners and buyers insight into how values are derived and how to best position a property.

What If the Appraisal Comes In Too Low or Too High?

Appraisal results can sometimes differ from expectations. Here's how different outcomes can affect a transaction:

Low Appraisal: 

• May lead to renegotiation of the purchase price
• Could require the buyer to cover the difference in cash
• Might result in the loan being denied or adjusted
• Can be appealed by submitting additional market data or requesting a second opinion

High Appraisal:

• May support a higher asking price
• Can strengthen the seller’s position in a competitive market
• Might influence loan terms favorably in a refinance situation

Regardless of the outcome, understanding your options helps navigate the next steps effectively.

Tips for Homeowners: How to Prepare for a Smooth Appraisal

Proper preparation can help ensure the home is presented in its best possible condition. Consider the following:

Clean and Declutter: A tidy, well-maintained home leaves a better impression.
Make Minor Repairs: Address small issues like leaky faucets, cracked tiles, or broken fixtures.
Highlight Improvements: Provide documentation for upgrades or renovations completed.
Enhance Curb Appeal: Simple landscaping, exterior touch-ups, and neat surroundings can improve perceived value.
Ensure Accessibility: Make sure all areas of the home, including attics and crawl spaces, are accessible for inspection.

Taking time to prepare can support a more accurate valuation and reduce the risk of delays or disputes.

FAQs

How long does a home appraisal take? The on-site portion typically takes 30 minutes to an hour. The full process, including the report, can take several days to complete.

Who pays for the home appraisal?
In most cases, the buyer or borrower pays the appraisal fee as part of the transaction or loan process.

Can a homeowner be present during the appraisal?
Yes, homeowners are usually allowed to be present but should avoid interfering. It’s helpful to provide any relevant documentation on the home’s features or upgrades.

Is the appraised value negotiable?
The appraised value is based on data and professional judgment. While it's not directly negotiable, additional evidence such as recent sales or upgrades may justify a reconsideration.

Final Thoughts
A home appraisal is a vital step in any real estate transaction. It ensures the property’s value is fair, protects the interests of all parties, and supports informed decision-making. By understanding the process and preparing properly, both homeowners and buyers can approach an appraisal with greater confidence and clarity.