Understanding the Home Appraisal Process: A Seller’s Guide

Common types of appraisals

Not all appraisals come in the same form. Here are a few different types of appraisals:

Traditional in-person appraisals

When an appraiser conducts a traditional in-person appraisal, they’ll examine the home and look for major items that will affect the home’s value. For instance, they may count rooms, check whether the HVAC system works, and look for upgrades or additions that improve the home’s price. They’ll combine that in-person information with broader research about neighborhood home sales, the house’s location, and other factors that could impact the home’s final fair market value.

Hybrid appraisals

With a hybrid appraisal, the appraiser may not physically visit the house to assess its value. They’ll still gather information about the house’s features, market, and other factors. But instead of stepping onto the property, they might assess the house by looking at photographs. They also might hire a real estate agent, home inspector, or another third-party person to gather information about the house for them.

Remote appraisals

Remote, or desktop appraisals, leapt during the pandemic. In this type of appraisal, a professional will conduct the full assessment without physically visiting the house or relying on a third-party report. In this scenario, nobody sets foot on the property, and the full appraisal is done remotely.

This type of alternative appraisal has also gained traction as a potential way to fight racial bias. Because it acts essentially as a blind appraisal, where the assessor interacts with important data rather than homeowners, desktop appraisals could reduce racial bias that otherwise may cause inaccurate or unfair appraisal values.

What the home appraisal process looks like for sellers

Whether you’re selling your house or trying to refinance your home, it’s important that your home appraisal doesn’t dip below your expectations. If you have an understanding of how home appraisals work, it will be easier to prepare before the appraiser pops in. Here are some important details about the home appraisal process:

What is an appraiser looking for?

As an appraiser assesses the value of your home, they look for a few common things that could impact the home’s value. Here are some of the typical things appraisers look for:

• Your home’s structure, including the interior, exterior, roof, and foundation
• Your home’s neighborhood, location, and local market
• Improvements and additions you’ve made to the home
• Characteristics of both your home and the local area, such as zoning specifications and environmental hazards

FHA appraisers will go a step further and examine extra features. These special appraisers will also assess things like appliances, electrical systems, plumbing, paint condition, and other HUD requirements.

What’s the difference between a home appraisal and a home inspection?

Although the two sometimes get confused, there are big differences between a home appraisal and a home inspection.

During the appraisal, the appraiser assesses the value of your home. That means they look at the market and your home’s features that influence its value. The ultimate goal with an appraisal is to pin down the fair market value for your home.

Alternatively, a home inspection is where a home inspector examines your house for safety. A home inspector will look for problems like mold, cracks in the foundation, termite damage, roof instability, and more.

What’s in an appraisal report?

An appraisal report is a detailed document that breaks down your property’s value. It digs into critical factors, such as the home’s location, condition, local market, and other important value drivers. Most commonly, appraisers use the Uniform Residential Appraisal Report to record the results of their work. Here are a few areas most appraisal reports cover:

• Your home’s exterior and interior conditions
• The home and property’s size or square footage
• The value of living areas