What’s Behind Your Real Estate Appraisal Value?

Answer

Real estate appraisal determines a property’s market value through an independent, licensed appraiser’s analysis. Lenders, buyers and sellers rely on this objective valuation to ensure fair pricing and mitigate lending risks.

During an appraisal, the appraiser examines:

• Local market data: Recent sales of comparable homes (the “comps”) in your neighborhood help establish a baseline value.
• Property features: Square footage, lot size, age, condition and upgrades (kitchens, bathrooms, energy‑efficient systems).
• Location factors: School districts, crime rates, proximity to amenities or public transportation.
• Replacement cost: An estimate of what it would cost to rebuild the home today, adjusted for depreciation.

Appraisers use three main approaches:

• Sales comparison approach: Aligns your home’s features with recent local sales.
• Cost approach: Calculates land value plus replacement cost minus depreciation.
• Income approach: Used for rental or investment properties, based on projected income versus expenses.

Most residential appraisals cost between $300 and $600 and take 7–14 days to complete. Lenders typically order the appraisal directly, and borrowers pay the fee at closing. FHA, VA and USDA loans all require an appraisal to meet their specific standards (Appraisal Foundation).

Why it matters: A low appraisal can stall or renegotiate a sale, while a higher-than-expected value may boost your equity position. Buyers are recommended to verify that the appraiser holds current licensing in your state.

Ultimately, an appraisal offers an impartial check on a property’s worth. It’s advisable to consult a licensed appraiser or your real estate agent if you have questions about the report, methodology or how to address discrepancies before closing.