What a home appraisal is
The Consumer Financial Protection Bureau calls an appraisal a written document that shows an opinion of how much a property is worth, and an independent assessment of its value. It describes what makes the property valuable and may show how it compares with other properties in the neighborhood. Every appraisal has a purpose, a date and a named set of people who may rely on it.
At a glance
When you need a home appraisal
| Situation | Who usually asks | Who receives the report | Why |
|---|---|---|---|
| Selling | The owner | The owner, and anyone the owner chooses to share it with | To document a value before pricing |
| Buying with a mortgage | The lender | The lender, and the borrower generally receives a copy under Regulation B | To confirm the property supports the loan |
| Refinancing | The lender or the owner, depending on the loan | The lender, and the borrower generally receives a copy | To support a new loan on the same property |
| Estate or trust | The executor, trustee or heir | Agreed in the engagement, often the executor or trustee and the estate's attorney | To state a value as of a stated date, often the date of death |
| Divorce | A spouse, attorney or mediator | Agreed in the engagement, often both spouses and counsel | To give both sides one neutral value at an agreed date |
| Private decision | The owner | The owner | To understand value before a choice |
The date and purpose differ, which is why the same house can need different reports.
How the process runs
Randy M. Sonns publishes five steps on his residential appraisal page. There is a consultation about the purpose, a property inspection of condition, upgrades, layout and site, a market analysis of recent comparable sales and trends, a written valuation report, and electronic delivery with a chance to ask questions. The longer walk-through is in how a home appraisal works.
What affects the value
- Location. Where the home sits relative to similar homes that sold recently.
- Size and layout. Finished area, room count and how the space is arranged.
- Condition and upgrades. Repairs, updates and wear.
- Site. Lot size and characteristics.
- The date. What the market was doing at the effective date.
None of these has a fixed dollar effect. The appraiser reads the market's reaction from comparable sales, which is covered in how appraisers determine home value.
How to prepare
Make every area accessible. Prepare a dated list of improvements and repairs, and gather documents such as plans, prior appraisals or permits. Tell the appraiser who will rely on the report. Do not try to influence the value, because an appraiser verifies facts from independent sources.
How to read the result
Read the first page for the property, the date, the purpose and the users. Then read the comparable sales and the adjustments. If a fact about your home is wrong, say so in writing. If a lender is involved, you will generally receive a copy of the appraisal for a typical first-mortgage loan promptly and no later than three business days before closing, unless you waive the timing.
Frequently asked questions
Do I need to be home during the appraisal?
Someone should be present to open every area, and you can answer questions about changes you made. Arrange this when you schedule.
How long does the visit take?
It depends on the size and complexity of the home. Ask when you schedule.
Will the appraisal tell me what to list my home for?
It states a value as of a date. Pricing is a separate decision that you may make with an agent.
Can I see the report?
The person who ordered it receives it. If a lender is involved, you are entitled to a copy for a typical first-mortgage loan.