The Appraisal Process: What Buyers and Sellers Should Know


The Appraisal Process: What Buyers and Sellers Should Know

The importance of understanding the steps to selling or buying a house.

A big question buyers and sellers often have is about the home appraisal process, how this can impact them when listing their house for sale. The importance of buyers and sellers understanding this process is ideal so that your home purchase, or sale goes as smoothly as possible.

What exactly is a home appraisal?

Undergoing the home appraisal process, a licensed real estate agent that is appraising the property gathers information about the property and the surrounding properties to give an estimate of its current market value. On some occasion’s appraisals are requested by the lender who is involved in financing the mortgage for the buyer. Majority of appraisals are requested by the seller to help advise the current market value for sale.

Why is the home appraisal process so important?

Home appraisals are a necessity for all involved parties in the transaction of the property: the lender, seller & buyer. 

The reason this is an essential for lenders are that they want proof that the amount of loan they are allocating to the buyer does not exceed the value of the home or this may end up a risky transaction and may lead to defaults on loans and go into bankruptcy. With this in mind the lender may not be able to sell the property for the same amount of money that was loaned out and could result in loss of money.

The importance of the home appraisal process advises the seller how much their home is worth (the fair market value of their property) and if their view on the value of the home is within the market value. If the owner of the property has priced their property too low, this may result in not being able to recover all the equity they have acquired while owning the property, essentially leaving money of the table. In some instances, the seller prices the property too high, they will likely have to negotiate with the buyer to either adjust their price to the appraised value. Find out more about how to determine your property value.

The appraisal process is just as important to the buyer as it provides proof that the property has been priced fairly, and hopefully has been appraised for at least the offer they have made to the seller. On behalf of the buyer if the buyer has requested an appraisal to be made on the property, they have made an offer on, and the appraisal comes in lower than the offer, the buyer may wish to renegotiate with the sellers or potentially pay out of pocket since the lender won’t cover the full amount.

What happens during a home appraisal?

Undergoing the home appraisal process, the appraiser most cases the agent, will attend the home to make a thorough inspection of the property inside and out. They will take into consideration the condition, features and other aspects of the property, comparing to other properties recently listed and sold within the suburb itself and surrounding suburbs. After inspecting the property, the appraiser most cases the agent will note down their inspection and value the house according to market conditions. The report will justify how they come to their conclusion regarding the market value of their home. The seller or lender will attain a copy of this report.

What type of information is on the appraisal report?

1. Subject

This initial part of the report is the basic information of the property. Such as the address of the property, is the home currently owned or rented the SP (site plan number), the last know purchase of the property, as well as when the property is or has been up for sale.

2. Site

This section describes the land the property is on. In this part of the report, it will state the site’s dimensions, shape, view, and whether it conforms to current zoning. This section most likely will include PD (planned development) or whether the property is prone to future developments. The appraiser in most cases will note any adverse site conditions, such as ground or flooding conditions.

3. Demographics

A description of the neighbourhood such as age, marital status, percentage of property owned/ rented, and in some cases job status. Characteristics of the neighbourhood such as urban, suburban, or rural are described, and the appraiser states whether the values of other homes in the area are increasing, stable, or decreasing in value.  

4. Sales Comparison Approach

This section is the Sales Comparison of the home appraisal process. This is where the appraiser concludes at a market value of the property. This is done by locating comparable properties. Comparable properties are properties that are of similar to the property being valued, this includes comparable features such as bedroom, bathrooms, car garages/ car ports and other additions to the property. Comps are houses that are as close as possible in structure and features to the house being appraised. When comparing properties, the appraisers also take into consideration properties close in physical proximity and if they were sold within the last year, depending on the economy the time frame may vary. The appraiser gives a detailed description of each comp, including address, selling price, square meters, and features, among other things. They use this information to conclude a realistic market value for your property.  

5. Improvements

This section of the appraisal report, the agent gives a general description of the property. This includes the condition of the property, exterior and interior of the home. This section could go in depth depending on the conditions. The agent may suggest improvements to further value the property.

8. Conclusion

In this section of the report, the agent taking into consideration all aspects stated in the report concludes with the value of the property in the current market. They may write any additional information to help support the market value they concluded with.


What can be done to make a house stand out during the home appraisal process?

This is a question many home owners ask themselves before undergoing a home appraisal. How can you increase your home appraisal value?

There are a number of ways to assist with this, the first thing to do to ensure you put your home’s best foot forward is to start with deep cleaning and decluttering.

Appraisers are required to follow criteria and regulations when appraising a property, but much of their job is subjective. By making a good impression with landscaping, curb appeal and thorough cleaning, you are creating the impression of a well-maintained home. If the property is occupied it is ideal to declutter before undergoing the Sales Process as the appraiser may take photos and measurements during the process. Household items left in the way will detract the agent’s ability to do their job to the complete standard. Learn more about how you can prepare you property for sale.

Another piece of advice, is to go through each room and fix any items you can, this can include leaking faucets, squeaky doors or holes in walls.

Finally, make sure to compile a list of upgrades made to the property, both structural, functional and aesthetic. Provide the list to the appraiser, this will help the appraiser see the added value you have made to the property. This may help them justify their final appraised value of the property.


The home appraisal process is just one of many important aspects to buying or selling a home, and the more you understand the process, the smoother the whole transaction can be.  

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