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How A Home Appraisal Works


For a lot of first time homebuyers and sellers there’s confusion around home appraisal: what it is and how it works. Here’s the rundown.

What is a home appraisal?

The home appraisal is one of the most important parts of the home buying/ home selling process. It’s also an important factor in refinancing. In fact, every time a loan is needed for a home, it must be appraised.

Put most simply-  a home appraisal is the value a home, based on the current real estate market. This value is what is then used to determine mortgage loans, estate settlements, taxes, etc. The value is what is used for most homeowners to get a loan from a lender.

The price of the home may be different than the appraisal. For example, if a home is priced to sell at $400,000 but only appraises for $300,000 then that home is overpriced. A bank would not be willing to provide a loan for the home based on the $400,000 amount.


What affects a home appraisal?

Obvious factors such as square footage, condition of a home, and location will certainly affect the home appraisal. While curb appeal and cleanliness of a house don’t directly affect its home value, general maintenance and repairs do. Appraisers look for serious faults or issues, not minor cosmetic improvements.

Additionally, the sales of similar homes in the area will affect the home appraisal. A home that appraises for $150,000 in one neighborhood could appraise for nearly double in another neighborhood. This is because the home appraisal also includes the lot value. The land itself may increase the appraisal significantly more than the house for sale.

The home appraisal affects everyone involved in the sale of the home: it will determine if a seller’s price is too high, if a lender feels comfortable with giving a loan on the property, and if a buyer is fully aware of the home’s value prior to purchase.

If you’re a home seller in the Nashville area with questions about how your home might appraise, give us a call! DeSelms Real Estate 615.550.5565

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