Buying or selling a home is one of the most significant financial decisions many people make. A crucial part of this process is understanding the appraised value of a home. Whether you're a homeowner, buyer, seller, or real estate investor, knowing how to find a home's appraised value helps in making well-informed financial decisions.

In this guide, we’ll cover the essential steps for determining a home's appraised value, why it matters, and how it impacts the real estate process.

What Is the Appraised Value of a Home?

The appraised value of a home is the professional estimate of a property’s market value, determined by a licensed appraiser. This value is crucial because mortgage lenders use it to ensure that the loan amount does not exceed the home's worth. The appraisal considers factors like the home's size, condition, location, recent sales of comparable properties (comps), and market trends.

Understanding the appraised value can help homeowners set a competitive asking price or guide buyers in making a fair offer.

Why Does Appraised Value Matter?

1. For Buyers: Helps determine how much a lender will finance and prevents overpaying for a home.

2. For Sellers: Sets a reasonable price for selling and helps avoid delays in closing a sale.

3. For Refinancers: If you're looking to refinance, your lender will require an appraisal to gauge the current market value of your home.

4. For Investors: Investors need accurate appraisals to understand potential profit margins and ROI when buying or selling properties.

Steps to Determine the Appraised Value of a Home

1. Hire a Licensed Appraiser

The most reliable way to find the appraised value of a home is through a licensed real estate appraiser. Appraisers follow a standard process to evaluate a home, considering:

• Square footage

• Property condition

• Location

• Comparable sales (homes similar in size and features recently sold nearby)

• Market trends

Hiring a professional appraiser typically costs between $300 and $450 but may vary depending on your location and the complexity of the appraisal.

2. Use Online Home Valuation Tools

There are numerous free and paid online tools that provide estimates based on available public records and recent sales data. Although not as accurate as a professional appraisal, these tools can give you a general idea of your home's market value. Popular tools include:

• Zillow Zestimate

• Redfin Estimate

• Realtor.com My Home

These platforms aggregate data from tax assessments, sales records, and price trends to give you a rough estimate. Keep in mind these tools should be used as a starting point rather than a final value.

3. Look at Comparable Sales (Comps)

Comparing recent sales of similar homes (known as “comps”) in your neighborhood is another way to estimate the value. You can search for comparable sales data on real estate websites, or ask a real estate agent for a Comparative Market Analysis (CMA). This method is most accurate when comparing homes with similar features, such as:

• Size

• Lot size

• Age and condition

• Neighborhood

Real estate agents often have access to MLS (Multiple Listing Service) data, which is more up-to-date and accurate than public records.

4. Check the Local Real Estate Market Trends

The broader real estate market impacts your home’s value. If demand is high and supply is low, property values typically rise. Conversely, a market with high inventory and fewer buyers can cause values to drop.

You can track local market trends through sources like:

• National Association of Realtors (NAR)

• Local MLS reports

• Real estate news websites

5. Consider Recent Home Improvements

If you’ve made any upgrades or improvements to your home (such as a kitchen remodel or a new roof), these could increase your home’s value. Be sure to keep detailed records of the improvements, as this information will be important during the appraisal process.

Appraised Value vs. Market Value

It’s important to note that appraised value and market value are not always the same. While appraised value is an expert's opinion based on several factors, market value is determined by what a buyer is willing to pay for the property.

For instance, during a hot real estate market, buyers may be willing to pay more than the appraised value due to competition. Conversely, in a slow market, the appraised value might be higher than what buyers are willing to offer.

Common Factors That Can Affect a Home's Appraisal

Here are some key factors that affect the appraised value of a home:

Frequently Asked Questions

1. What happens if the appraisal is lower than the purchase price?

If the appraisal comes in lower than the agreed-upon purchase price, the buyer may need to renegotiate the price or cover the difference with a larger down payment.

2. How often should I get my home appraised?

You should consider getting an appraisal when selling, refinancing, or after making significant home improvements.

3. Can I challenge a low appraisal?

Yes, if you believe the appraisal is inaccurate, you can request a review or challenge it with additional data (such as overlooked comps or home improvements).

4. Does an appraised value affect property taxes?

No, property taxes are usually based on the assessed value, not the appraised value, although they are related.

5. Do appraisals expire?

Most lenders consider an appraisal valid for 3–6 months, but it’s always good to check with your specific lender.

Final Thoughts: Why the Appraised Value of a Home Matters

The appraised value of a home plays a critical role in real estate transactions. Whether you're a buyer, seller, or investor, understanding how to find and interpret the appraised value can help you make informed decisions and avoid overpaying or underselling a property.

By following the steps above—hiring a licensed appraiser, using online tools, checking comparable sales, considering local market trends, and keeping track of home improvements—you can gain a clearer understanding of your home’s value and make the best possible choices in the real estate market.