Understanding Home Appraisals: What Buyers and Sellers Should Know

When buying or selling a home, the appraisal can be one of the most important—and sometimes misunderstood—steps in the process. Whether you’re a buyer relying on financing or a seller pricing your property, knowing how appraisals work can prevent surprises and keep the deal moving smoothly.

What Is a Home Appraisal?

A home appraisal is an unbiased estimate of a property’s market value conducted by a licensed appraiser. Lenders require appraisals to ensure the amount they’re financing aligns with the home’s actual worth. For buyers and sellers, the appraisal is an important checkpoint that can affect negotiations, loan approvals, and timelines.

What Appraisers Look For

Appraisers don’t walk through a home guessing its value—they follow a detailed, objective process. Here are the main factors they consider:

1. Comparable Sales (Comps)

Recent sales of similar homes in the area are a key benchmark. Appraisers compare:

Location
Square footage
Number of bedrooms and bathrooms
Lot size and layout
Style and age of the home

2. Home Condition

A well-maintained property typically appraises higher. Appraisers evaluate:

Roof and structural integrity
Windows, doors, and major systems (HVAC, plumbing, and electrical)
Flooring, fixtures, and overall upkeep
Signs of damage or needed repairs

3. Upgrades and Features

Modern updates and amenities can add value:

Renovated kitchens and bathrooms
Finished basements or bonus rooms
Decks, patios, and outdoor spaces
Energy-efficient systems and windows

4. Location and Surroundings

Neighborhood desirability matters. Appraisers note:

School district quality
Proximity to shopping, parks, or transit
Noise, traffic, and zoning factors

Common Appraisal Myths—Debunked

There’s no shortage of confusion around appraisals. Here are a few myths worth clearing up:

Myth #1: The Appraisal Is the Same as the Home Inspection

Reality: An inspection checks the condition of a home for defects. An appraisal determines what the home is worth in the current market.

Myth #2: The Appraised Value Always Matches the Sale Price

Reality: While appraisals often align with offers, hot markets, bidding wars, or dated comps can lead to discrepancies.

Myth #3: Cosmetic Fixes Will Dramatically Raise Value

Reality: Fresh paint and decor help with buyer impressions, but appraisers focus on structure, systems, and comparable properties.

Myth #4: You Can Influence the Appraiser’s Number

Reality: Appraisers are licensed professionals required to follow strict guidelines. Their opinion must be objective and based on data.

What to Do If the Appraisal Comes in Low

A low appraisal doesn’t have to derail the deal—there are options for both parties:

1. Request a Reconsideration

If you believe there were overlooked upgrades or better comps, your agent can submit additional data to the lender and request a review.

2. Renegotiate the Purchase Price

In many cases, buyer and seller come to a compromise by lowering the sales price to meet the appraised value.

3. Make Up the Difference in Cash

Buyers may choose to pay the gap between the appraised value and the contract price if financing is still approved.

4. Switch Lenders or Order a New Appraisal

In rare situations, changing lenders or getting a second appraisal is an option—though it can add time.

The Bottom Line

Appraisals are a vital piece of the real estate puzzle. For buyers, they provide assurance that you’re not overpaying. For sellers, they validate your listing price and help secure financing for the buyer. Working with a knowledgeable real estate professional—like the agents at Coldwell Banker Hearthside—can help you prepare for the appraisal process and navigate any challenges that arise.

Ready to buy or sell with confidence? We’re here to guide you every step of the way.

Understanding Home Appraisals: What Buyers and Sellers Should Know