What Do House Appraisals Mean?

There are a few different reasons a house appraisal may be conducted. You may run into a house appraisal situation when buying a home, refinancing a home or for your property tax calculations. Understanding your house appraisal can be important to your future financial position as you build equity in your home.


The definition of an appraisal is "an opinion of value." For a house appraisal, a professionally licensed or certified appraiser will use calculations to determine a value for your home. An appraiser will look at comparable properties that have sold in your area and use mathematical formulas to arrive at a value.


The most common real estate appraisals are performed when someone is buying or refinancing a home. The lender must make sure they are not overlending on the home, which can put them in trouble if they need to foreclose on the home. It also helps protect the buyer from overpaying for a home.

Property Taxes

Counties will also perform house appraisals in an effort to calculate property taxes. These appraisals are usually casually performed, with a lot less attention to detail than a lender would require, oftentimes just resulting in a a so-called drive-by of the home. This appraisal amount will determine your yearly property taxes.

How It Is Done

Licensed or certified appraisers are specially trained to conduct this valuation. They will examine houses that have sold in the area and use statistical data such as square footage of home, lot size, condition of home and amenities, among other considerations. Appraisers are taught mathematical formulas that are used to come up with a house value.

Market Value vs. Appraisal

Oftentimes, you will hear the terms "market value" or "comparative market analysis." These are two ways to estimate home value using the prices of what similar homes actually sold for. Typically, realtors or real estate brokers will perform this task for clients. This is a good way to estimate information, but remember, only a licensed appraiser can give an actual appraisal.