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The Basics of a Home Appraisal (+ Free Checklist)

May 29, 2019

Between the buyer, seller, and lender, there are countless steps to take before a real estate deal can close.

Every party involved in the home buying process wants to know that they’re getting the best deal possible. However, it’s no secret that pricing a home can get tricky. One of the easiest ways to keep the process as fair as possible is to have the home appraised.

An appraisal can make or break a deal, so it’s important to familiarize yourself with the process before jumping in. In this article, we’ll cover the home appraisal process more in-depth and share what to expect before, during, and after.

Home appraisal basics

Appraisals exist to protect the buyer and lender during the home buying process. Before finalizing a mortgage, a lender will require that the buyer get the property appraised. This is to ensure that the home is worth the amount the buyer is seeking to borrow from the bank.

By bringing in a third party to evaluate the property, both the buyer and lender can be sure that they’re getting an objective opinion. Appraisers are licensed experts who have no connection to the deal – it’s their job to be independent and unbiased. They will look at the physical condition of the property as well as consider outside factors such as market trends and the sale prices of comparable homes in the area. We’ll touch more on this later.

Is a home appraisal required?

The short answer is no. If the home is being paid for in cash, without a loan, then an appraisal is not required. However, most people purchase their homes with the help of a mortgage. Lenders will always require that a buyer gets a home appraised to make sure the property is worth the amount that is being requested in the loan. That means that even though the buyer and seller may have agreed on a sale price, it’s not final just yet.

The lender will choose the appraiser, the buyer is responsible for footing the bill, and the seller just has to make sure the appraiser can access their home. The appraisal will usually take place while the property is in escrow.

Home appraisal vs. home inspection

Although they may be similar, a home appraisal and inspection are not the same thing. As mentioned previously, an appraisal is required by a lender to protect their investments. Its purpose is to determine the value of the property before finalizing a mortgage loan.

A home inspection is ordered by the prospective homebuyer. During this process, an inspector will examine the physical condition of a property while paying close attention to its internal systems such as plumbing, air conditioning, etc. This helps the buyer identify any potential problems or maintenance issues with the property. They can then use this information to negotiate a final price with the seller. While an inspection is highly recommended, it’s not required.

What do appraisers look for?

The appraisal industry is highly regulated. Appraisers are licensed at a state-level and work off of a set of strict guidelines when evaluating properties. A standard appraisal will take a little under an hour to complete.

In general, appraisers will examine the following elements of a property:


In real estate, location is everything. The neighborhood that a property is located in will have a big impact on its value. In addition to geographic location, appraisers will take into account whether or not the home has a view of a landscape or if it’s near certain undesirable landmarks. A home that’s near a busy highway or railroad track may be valued lower.


A bigger home will appraise for a higher value. Appraisers will look at the square footage of the home, in addition to the acreage of the overall plot of land. They will also consider the functionality of the home’s size by looking at the number of bedrooms and full or half bathrooms. The garage and driveway will have an impact here, too.

Physical condition

Appraisers will examine both the interior and exterior features of a home. This includes any observable features such as foundation, walls, floors, and the materials used to build them. They will take note of any general maintenance flaws such as broken door handles or leaky faucets. If a home has a basement, attic or crawl space this will also be considered.

Note: An appraiser isn’t looking at things like furniture, decor, or cleanliness. However, chipped paint or holes in the wall will be considered.

Neighborhood comparables

Neighborhood comparables, often called “comps” in industry speak, are the sale prices of comparable homes in the area. An appraiser looks at this data to make sure the home they’re currently appraising is on par with other nearby properties that have similar characteristics.

Preparing for appraisal

Every homeowner wants their property to have a high market value. After all, a high appraisal is just one step closer to getting the deal done.

There are several things that sellers can do to boost the value of their home before the appraisal to make sure everything runs smoothly:

  • Gather and organize receipts of past home improvement projects
  • Take care of any minor repairs such as chipped paint or stained flooring
  • Declutter and organize belongings
  • Tidy up the exterior of the home. This includes landscaping, driveway and any possible damage to the gutters or garage
  • Although cleanliness won’t impact the value of the home, cleaning up before the appraisal is a best practice to follow

If you’re a homeowner that wants to prepare for an upcoming visit from an appraiser, use this free checklist to make sure you cover all your bases.

FREE: Home Appraisal Checklist Download Now →

How much does a home appraisal cost?

The cost associated with a home appraisal will vary but typically falls between $300 and $800. If the home is a luxury property or has more than one unit, the costs could be higher than average. This fee is usually accounted for as part of other closing costs the buyer should expect to pay.

What happens after the appraisal?

After an appraisal is complete, it will be reviewed by the lender. If the appraisal comes back low, the deal could be in jeopardy. The lender isn’t going to loan out more money than the home is appraised at, or worth. The buyer can either make up the difference with their own money, or go back to the drawing board and try to re-negotiate with the seller.

TIP: Including an appraisal contingency in the purchase agreement can save the buyer from a low appraisal. With a contingency, if the appraisal comes out low, the buyer can walk away from the deal altogether.

If the appraisal comes back at or above the purchase price, this is good news. It doesn’t necessarily mean the buyer is getting a good deal, but it’s one step closer to closing on the property.

Seal the deal

There are a lot of moving parts in the home buying process. When all parties have a lot at stake, everyone is looking out for themselves and their assets. A home appraisal is just one important step in making sure the playing field is fair and even. If all goes well, it will be a win-win-win for the buyer, seller, and lender.

The Basics of a Home Appraisal (+ Free Checklist) A home appraisal can make or break a real estate deal. Learn everything you need to know about appraisals, complete with a free checklist for homeowners.
Izabelle Hundrev Izabelle is a Partner Marketing Specialist at InStride and a former content specialist at G2. Outside of work, she is passionate about all things pop culture, food, and travel. (she/her/hers)

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