What Happens at a Home Appraisal?

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A home appraisal is done when a home is being purchased. The banker or financial institution providing the mortgage hires an appraiser to report on the true value of the house based on a variety of factors. The appraisal is paid for by the borrower to prove the loan is backed by stable property that's properly valued. The appraisal goes into the final documents at the closing of the home and is typically kept by the lender. A homeowner can request a copy of the appraisal. An appraisal is performed by a licensed appraiser and is more in-depth than the market analysis provided by a real estate agent when pricing the house for the market. Appraisers are licensed or certified by the state and certify that their documentations comply with the Code of Appraisal Practice of the Appraisal Institute.

Replacement Cost

A replacement cost estimate provides the lender with the amount it would take to replace the existing structure. This ensures that proper insurance coverage is maintained on the home while under financing. Before visiting the property, an appraiser determines the tax value of the property and the address and checks plot maps and finds out if any assessments or liens are on the property. A description of the neighborhood, city and county amenities and other community attractions are noted in the appraisal. The landscaping and exterior of the property are documented as the appraiser walks the lot, noting placement of streetlights, sidewalks, topography and any noticeable easements, such as railways or creeks.


Inside the house, the appraiser measures each room and notes any obvious improvements or additions made, such as a sunroom or basement remodeling. The appraiser gauges the wear on the flooring, foundation, walls and main structure based on the age of the home. The number of rooms, bathrooms and living space are counted and recorded. While walking through the house, the appraiser lists the condition of everything from appliances to carpeting, windows and floor coverings. The heating and air conditioning systems are checked and noted as working or not working. The appraiser notes the appearance of garages, carports and decks. Descriptions are broad and rarely include specific references to levels of quality. Obvious signs of termite infestation, water damage or structural deterioration are reported.


An appraisal usually includes a comparison of similar houses in the neighborhood. A comparison of upgrades, landscaping and exterior design is made in the final report. The appraiser monitors recent home sales and includes those figures in the report, letting the lender know how much comparable homes in the area sold for in the last year or two. The entire process can take anywhere from 30 minutes to three hours, depending on the size of the property. An appraisal usually takes about 10 legal-sized pages and includes pictures of neighboring properties and snapshots of the inside and outside of the home appraised. The appraiser is not an inspector and does not look beyond the obvious.

About the Author

Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."

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