Your Guide to What Happens During a Home Appraisal

Your Guide to What Happens During a Home Appraisal

A home appraisal is a critical component of the refinancing and home-buying process. It helps determine the fair market value of a property and can significantly impact the sales price and loan amount. This guide will walk you through what happens during a home appraisal and how appraisers determine the value of a home.

What Happens During A Home Appraisal

Understanding the home appraisal process is key for any homeowner or prospective buyer.

Initial Scheduling and Preparation

Once the lender or the homeowner schedules an appraisal, a licensed appraiser is assigned to conduct the assessment. It’s beneficial for the homeowner to ensure the property’s value is presented in the best light. This might involve addressing any minor repairs or enhancing the curb appeal.

In this phase, understanding the role of the FHA (Federal Housing Administration) can be crucial, especially for a borrower using an FHA loan for their home purchase. The FHA sets specific guidelines for appraisals, which the appraiser must follow to ensure the property meets their standards. This can include checking for structural soundness and safety.

Appraiser’s Walkthrough

During the appraisal, the appraiser will conduct a thorough walkthrough of the property, noting the home’s overall condition. This includes assessing the number of bedrooms, square footage, upgrades, and the property’s general condition.

Moreover, a professional real estate agent can provide valuable insights during this phase. They can assist homeowners in understanding the appraisal process and how it influences the home purchase decision. Real estate agents can also help address any issues affecting the appraisal value.

Home Inspection vs. Home Appraisal

It’s important to distinguish between a home inspection and a home appraisal. While a home inspector focuses on the home’s condition for maintenance and repair purposes, an appraiser focuses on valuing the property for sale or refinancing.

How Appraisers Value Your House

The process of valuing a house during an appraisal is both an art and a science.

Analyzing Comparable Sales

Appraisers look at comparable sales, often referred to as comps, in the area. This involves comparing the subject property with similar homes recently sold in the neighborhood, adjusting for differences like size, condition, and features.

Considering Home Improvements

Any significant home improvements or renovations are taken into account. If you’ve recently updated your kitchen or added a bedroom, these changes can increase the appraised value of your home.

Researching the Market

The current market conditions play a crucial role. An appraiser will consider the recent sales trends, market value, and demand for homes in the area. This includes understanding the dynamics of the local real estate market and how they impact the valuation of your property.

Understanding Local Real Estate Trends

Before an appraisal, it’s essential for both the appraiser and the homeowner to have a grasp of local real estate trends. This involves researching recent home sales, current market conditions, and the prices of comparable homes in the area.

Additionally, the appraiser evaluates the home equity accumulated in the property, which is crucial for homeowners considering refinancing or selling their home. 

Analyzing Comparable Sales (Comps)

Appraisers typically analyze comps to help determine the market value of a home. This means looking at similar properties regarding square footage, number of bedrooms, and other features recently sold in the same area.

Adjustments for Unique Features

If your home has unique features or upgrades that aren’t present in comparable homes, the appraiser will adjust to account for these differences. These adjustments help align your home’s value with the fair market value.

Determining the Final Appraised Value

The appraiser compiles all this information into an appraisal report, providing an estimated value of the home. The mortgage lender will use this value to determine the loan amount for a purchase or refinance, and homeowners will set a realistic asking price.

It’s important to note that the appraised value can affect the closing costs of a home purchase. These costs can vary based on the appraised value and are typically a mix of fees paid by both the buyer and seller during the closing of a real estate transaction.

In some cases, such as when selling a house with unique challenges or in need of a quick transaction, homeowners might look for alternative selling avenues. 

Understanding these steps in the appraisal process can be particularly beneficial for homeowners considering selling or refinancing. 

The home appraisal plays a vital role in any real estate transaction, whether for a new home, a single-family home, or a refinancing situation. Understanding the factors that appraisers consider, from home improvements to comparable sales, helps homeowners and buyers alike navigate the complexities of real estate with greater confidence and insight.

Companies like Mill City Home Buyers offer direct purchase options if you’re looking for cash home buyers in Minnesota. These can be particularly appealing for those looking for a quick sale without the complexities of traditional home-buying, such as selling your house with a deed of trust.

How Appraisers Inspect Your Home

A key part of the appraisal process is the physical walkthrough of the home to evaluate the condition fo the property. The appraiser will inspect the interior and exterior of the property, noting any features that add to or detract from the value of the home.

Home improvements, both DIY and professional, are assessed during the inspection. The condition of the home, including any repairs needed, also plays a significant role in the appraisal. 

The appraiser will verify that any additions or major renovations comply with local building codes and have the required permits. Unpermitted work can negatively impact the appraised value.

Appraisers often take photographs as part of their inspection. These images are used to support their findings in the appraisal report and provide visual proof of the property’s condition and features.

Finalizing the Appraisal Report

After inspecting the home and researching the market, the appraiser compiles their findings into a detailed appraisal report. This report outlines the methods used to determine the value of the home, including the comps analyzed and any adjustments made for unique features.

Once the report is compiled, it undergoes a review process. The appraiser ensures that all data is accurate and reflects the actual market value of the home. The finalized report is then sent to the homeowner or lender, concluding the home appraisal process.

Companies like Mill City Home Buyers and services such as cash home buyers in Minnesota may also use these appraisal reports as part of their process when making a cash offer on homes. 

Who can buy my house fast in St. Paul for those needing a quick sale? Mill City Home Buyers offers alternative solutions, bypassing the traditional home selling and appraisal processes.

How Appraisers Inspect Your Home

Can Appraiser Price Report Affect Your Home Sale?

Understanding the impact of an appraiser’s price report on your home sale is crucial for homeowners looking to navigate the real estate market effectively.

Influencing the Sale Price

The appraised value detailed in the appraiser’s price report can significantly influence the sales price of a home. If the appraisal report reflects a market value higher than your listing price, it can justify a price increase. Conversely, a lower appraised value may necessitate a reduction in the asking price to align with the market.

Impacting Buyer’s Mortgage Approval

For buyers relying on financing, the appraised value of a home directly impacts their mortgage loan approval. Lenders typically offer a loan amount based on the lower of either the sale price or the appraised value. 

A low appraisal can result in the buyer needing to renegotiate the sale price, increase their down payment, or, in some cases, abandon the purchase if the financing falls through.

Negotiation Leverage

The appraisal report can serve as a negotiation tool. For sellers, a higher valuation provides leverage for sellers to maintain or increase the asking price. For buyers, a lower-than-expected appraised value offers a basis to negotiate a lower purchase price.


The role of an appraiser’s price report in a home sale is significant and multifaceted. It sets the benchmark for the home’s value and influences the dynamics of the sales negotiations and the buyer’s ability to secure financing. 

This report is a critical tool that reflects the home’s value in the current market, considering factors like comparable sales, home improvements, and the property’s overall condition.

For homeowners, understanding the implications of this report is essential, especially when making decisions about listing prices or considering offers. When the appraisal presents challenges, homeowners might explore alternative selling avenues. 

Whether through conventional real estate channels or alternative selling methods, the appraisal report plays a crucial role in the home selling process. It offers a realistic snapshot of a property’s worth in the eyes of lenders, buyers, and the market at large, thereby influencing the trajectory of the sale from listing to closing.

If you’re looking for a home purchase, Mill City Home Buyers has you covered. 

We provide different routes for those seeking a more direct sale, bypassing the traditional appraisal-dependent market. If this sounds appealing to you remember we buy houses in Minnesota. Even if you’re selling your house with a deed of trust, we can help you.


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