What Does a House Appraisal Consist Of?

by Kristen May ; Updated July 27, 2017

In a house appraisal, a licensed appraiser visits the property and writes a report that includes basic features of the property and an assessment of its value. Most people know of appraisals in the context of home sales because a lender orders an appraisal to ensure that the mortgage amount does not exceed a certain percentage of the home’s value.

Types

Two major types of appraisals for homes serve different functions. A market cost appraisal assesses what the home should sell for in the current housing market and is the type used by lenders to assess how much money to loan the buyer. A replacement cost appraisal is more commonly used in the sale of new homes and for other purposes, such as insurance.

Comparisons

As one step of the appraisal process, the appraiser compares the home to other comparable homes that have sold in the area within the past six to 12 months. In a quickly changing real estate market, the appraiser may limit the comparison to more recent sales for accuracy. If the buyer knows of any special circumstances that affected the sale price of homes in the area, such as a short sale due to a divorce or relocation, mentioning these to the appraiser can help keep the low sale prices from having too much of an influence on the home's appraised value.

Neighborhood

Part of the appraisal considers the neighborhood in which the home is located. Factors such as having good schools, parks or shopping districts within walking distance and ample street lighting can increase the value of a home. A location near noisy or undesirable areas such as train tracks, busy roads or airports may decrease a home’s appraised value.

Home Structure

A home appraisal is not an inspection and therefore does not check to be sure that the appliances and plumbing all work well. Rather, it assumes the home is in good working condition. The appraisal looks at more basic information such as the number of rooms, type of flooring, layout of the home, square footage, the garage and yard and landscaping.

Considerations

Although an appraisal does not necessarily take a home’s cleanliness into account, the homeowner may want to tidy up the home before the appraisal to ensure that the appraiser is not hindered by clutter. Drawing the appraiser’s attention to the home’s best features or defining features, such as an addition, new roof, new windows or remodeled kitchen, may help increase the home's value if these are noted on the appraisal.