Real estate appraisals are a vital component of the real estate transaction process. Whether you’re buying, selling, or refinancing a property, understanding how an appraisal works is essential. Appraisals provide an objective assessment of a property’s value, helping lenders, buyers, and sellers make informed decisions. In this blog, we’ll demystify the appraisal process in real estate and explain the key factors that appraisers consider.

What Is a Real Estate Appraisal?

A real estate appraisal is a professional assessment of a property’s value conducted by a licensed appraiser. The appraisal aims to determine the fair market value of the property, which is the price a willing buyer and a willing seller would agree upon in an open and competitive market.

How Does an Appraisal Work?

The real estate appraisal process follows a structured series of steps:

1. Selection of an Appraiser:

When a lender or a homeowner requests an appraisal, they typically hire a licensed and certified appraiser. Appraisers are impartial third parties who have no vested interest in the property’s outcome.

2. Property Inspection:

The appraiser visits the property to inspect both the interior and exterior. During this visit, they assess various factors that can influence the property’s value, such as its size, condition, layout, and any unique features.

3. Comparable Sales Analysis:

One of the critical steps in the appraisal process is the comparison of the subject property to recently sold, similar properties in the same neighborhood. These “comparables” or “comps” provide a basis for estimating the subject property’s value. Appraisers consider factors like location, size, age, condition, and amenities when selecting comps.

4. Adjustments:

Appraisers may make adjustments to the comps to account for differences between the subject property and the comparable properties. For example, if the subject property has an extra bedroom compared to a comp, the appraiser may adjust the comp’s value upward to reflect this difference.

5. Market Analysis:

Appraisers also analyze local real estate market conditions, including supply and demand, economic factors, and trends. These factors can influence the final valuation.

6. Final Valuation:

Using the information gathered from the property inspection, comparable sales analysis, and market analysis, the appraiser calculates a final estimate of the property’s value. This value represents the appraised value of the property.

7. Appraisal Report:

The appraiser compiles their findings and conclusions into a detailed appraisal report. This report includes the property’s description, a list of comparable sales, adjustments made, and the final appraised value.

8. Review and Submission:

The appraisal report is submitted to the client who requested it, whether it’s a lender, buyer, or seller. The client uses the appraised value to make informed decisions regarding the property transaction.

Factors Considered in an Appraisal

Several factors influence a property’s appraisal value, including:

  • Location: Proximity to schools, amenities, and job centers can significantly impact a property’s value.
  • Size and Layout: The size of the property and its layout, including the number of bedrooms and bathrooms, play a crucial role.
  • Condition: The overall condition of the property, including any necessary repairs or renovations, is a significant factor.
  • Upgrades and Features: Special features like a swimming pool, fireplace, or updated kitchen can increase a property’s value.
  • Comparable Sales: Recent sales of similar properties in the area provide a benchmark for the appraisal.
  • Market Conditions: The state of the local real estate market, including supply and demand, can affect property values.
  • Zoning and Land Use: Zoning regulations and land use restrictions can impact a property’s value.


Real estate appraisals are a critical part of the real estate transaction process, providing an unbiased assessment of a property’s value. Understanding how appraisals work and the factors appraisers consider can help buyers, sellers, and lenders make informed decisions. By relying on professional appraisers and valuations, the real estate market can maintain its integrity and stability.

Richard Farmer

Author Richard Farmer

More posts by Richard Farmer

Leave a Reply