House Appraisal Process

by Michelle Hooper ; Updated July 27, 2017
Appraisers consider the homogenuity of a neighborhood in determining market value.

A home appraisal is done by licensed appraisers appointed by mortgage lenders who are helping individuals that qualify for loans. This is an important process in qualifying a buyer for a loan. An appraisal determines whether the property is sufficient collateral for the requested loan amount.

Appraisers determine a fair market value for homes. This is the price the home could potentially bring to a competitive and open real estate market as a listing. Tools used by appraisers are multiple listing services, public records, real estate agents and more. Some appraisers may also be licensed real estate agents because they have access to many of the same things agents use. If an appraiser approves a property, he will then send the information to an underwriter, the final decision maker in qualifying a borrower.

A low appraisal price in comparison to what offer price is on a buyer's contract could destroy a real estate deal. The seller would have to agree to accept a lower offer on her home to sell it.

Step 1

Recognize the location of a property. The location of a property is of great importance. The location is affected by the neighborhood in question and the area of the city. This does not mean certain areas cannot be included, as that would be discrimination. On another note if certain areas are popular and have a good reputation, these homes tend to sell fast, which looks great to an appraiser.

Step 2

Analyze the details of everything in a neighborhood. There is some influence when driving through a neighborhood to get to a home. Appraisers do consider whether or not the drive through a neighborhood is pleasant. The layout of the neighborhood, its looks and landscaping patterns are also considered. Because homes that are well-maintained have greater value and marketability, appraisers look for this too. Another factor appraisers take into consideration in neighborhoods is homogeneity (having one type of housing). On one street, a neighborhood could have half duplexes and half homes, but homogeneous neighborhoods tend to be more desirable to lenders and buyers.

Step 3

Observe and record every detail about the property in question. Appraisers look at everything regarding a property. They look at the landscaping, the exterior, over-improvements or under-improvements (both inside and outside),and sales appeal. Other factors include property zoning, the lot itself and the flood area. Flood areas must have flood insurance if a loan is made -- also, whether a home is on a hillside where the home could slide, depending on the soil or topography, could be an issue too. Some lenders will also deny a loan if certain zoned areas do not allow building permits.

About the Author

Michelle Hooper began writing professionally in 2006 as a Commercial Real Estate Reporter. She wrote for Crittenden Publishing, Inc. covering markets all over the United States, observing investment strategies of pension funds and financial advisers. In 2008 she published a book, “Online Investing: Everything You Need to Know Explained Simply,” with Atlantic Publishing Company. Hooper has a bachelor's degree in communications from Mesa State.

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