What Does a Home Appraisal Include?

If you want to buy a home and you need to borrow money to do so from a financial institution, you’ll need a home appraisal for the lender, but it’s also beneficial to you because it’s nice to know what the property is really worth. Likewise, if you want to refinance your home, your lender will probably require a new home appraisal.


A home appraisal is a summary of your property and a comparative analysis of other properties and real estate similar to yours that have recently sold in your area, usually within your neighborhood, used to arrive at an estimated fair market value for your property.


Most financial institutions require a home appraisal be prepared by a qualified, impartial appraiser to determine the reasonable fair market value of the property at the time prior to approving a loan on the property. Essentially, the lender wants to be sure your home is valued in excess of the amount of money it will lend you.


A home appraisal will describe the home—including the kind of structure, address, legal description, lot size or acreage, zoning classification, utilities available, square footage of the home, approximate age, number and identification of rooms including number of bedrooms and bathrooms, a rating of the home’s overall condition, a list and description of any outbuildings (such as a detached garage), the amount of real estate taxes for the previous year, and a final estimate of value. It will also include comparisons to similar homes in the market area (size, age, type) that sold recently to demonstrate the fair market value of the home at this time. These comparisons include similar home descriptions—comparing them to the home in question—and the actual price each home sold for.


Most home appraisals include a summary page, a quantitative analysis (including description of the home being appraised and other comparable homes sold recently in the same market area), statements attesting to the appraiser’s certification, a statement of any limiting conditions and disclosures, a basic building sketch and square footage of the building, and photos of the property and the comparable properties referred to.


Homes are generally appraised using one of three appraisal methods—market data, cost (to replace the home in the event of a complete loss), or income (used if the property is a rental).


A comprehensive home appraisal ensures that you are not getting into debt in excess of the actual value of your home.


A real estate appraisal is NOT an assessment, a comparative market analysis, or a home inspection. These are separate documents used for other specific purposes.