How Do Appraisers Determine a Home's Value

How Do Appraisers Determine a Home’s Value

Home appraisals are a critical component of any transaction where you’re buying or selling a home, or possibly refinancing with a lender. While it is common practice, there are still a fair number of questions about the process and what it entails exactly. If you’re about to go through a home appraisal, here’s an overview of what you need to know.


What is a Home Appraiser

A home appraiser must be certified to conduct home appraisals according to their state laws. In addition, the appraiser must be entirely objective, meaning they also can’t have any prior interests or biases in the appraisal of the house. The appraiser should also have significant knowledge of the region they’re working in, and the housing market there.


Two Main Approaches

Appraisers need to provide very specific details about the value of a home, so there are two methods used more commonly than others. The main approaches are the sales comparison approach and the cost approach. The sales comparison approach works much as it sounds. Essentially, the home undergoing appraisal will be compared with similar homes.

The properties used as a comparison need to have been sold recently, and contain similar features and be of comparable size. Ideally, the houses will have the same amount of bathrooms, bedrooms, lot size, and additional features like garage space and fireplaces.

In this approach, the ultimate value of the home includes the features therein and the average value of very similar homes.

In the cost approach for appraisals, the results are more buyer-directed, meaning it’s used to indicate a fair buying price on the part of the purchaser when looking at land for new construction. This approach is best used when comparable lots of land are available, although if none are available, an estimation will be used instead. To determine the value, the cost of land is added to the cost of new construction, with depreciation costs subtracted. This gives the appraiser the appropriate market value for the property.


What Plays a Role

Appraisers have a very methodical approach to the valuation of a home. Starting from the outside in, here are the main factors that play a role in the appraisal:



One of the first big players in any appraisal is the foundation of the home. A foundation that shows signs of damage or cracking can create future issues, so the appraiser will take a closer look here.


Exterior Appearance and Maintenance

The appraiser will inspect the exterior of the home, including all siding, fixtures, landscaping, walkways, as well as exterior window treatments and the roof.


Interior Features

The appraiser will conduct a ‘walk through’ of the home to inspect the interior. They first look at measurements and details of each space, taking note of each area’s specifications. They will also be looking at the condition of all the interior elements, as well as items that are updated or need improvement. Other important features in the appraisal include the size and quantity of windows, lighting, doors, and flooring.


Included Amenities

The amenities within the home will also be evaluated by the appraiser, as these features can have a fair impact on the value of the home. Amenities can be an indicator of how comfortable the new homeowner will be in the home, so the appraiser will check for things such as window treatments, central air, and appliances.



A home appraisal is an integral part of buying and selling property, so it’s important to ensure you have a licensed or certified appraiser. While the appraisal is methodical and objective, knowing how appraisers value a home can give you a step up when you’re in the housing market.

Remember, while home appraisers aren’t home inspectors, they have to do an extremely thorough assessment, so take care of any necessary repairs you’re aware of before beginning the process.


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