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How Does A Home Appraisal Work

what is a home appraisal

One of the final steps of the home purchasing process is the appraisal. In most situations, the bank lender handles the logistics of acquiring the current appraisal. It is important for the new homebuyer to understand the results of the appraisal because it will detail the current and projected future value of the property.

Keep in mind that the appraisal is very different from the home inspection. While the inspection is focused on the physical status of the house, the appraisal is focused solely on determining the value of the property based on a few key factors:

  • Neighborhood
  • Gross Living Space
  • Lot Information
  • Property Age
  • Recent Area Sales Values
  • The View

How The Appraisal Works

In Iowa, appraisals as a part of a home purchase are typically managed by the lender and their legal counsel. When the actual appraisal occurs, the appraiser will already have done extensive research on the actual property and the surrounding neighborhood. 

First, an “inspection” occurs. This is when a licensed and certified appraiser tours your property and looks to establish the fair market value.

Second, the appraiser reviews all of their research which encompasses the surrounding area, school districts, recent area home sales, and overall market potential.

Finally, with all their data in hand, the appraiser produces a detailed report of their findings which includes a single number detailing their fair market value estimate for your home.


Unlike the home inspection -- which typically takes about two hours -- the appraiser’s inspection only takes about 30 minutes of on-site time. Their on-site inspection is only to gain insight into the neighborhood and the physical home structure.

More important to the appraiser is the data. They review the age of your home, the home type, its location, and area foreclosures. Those all factor into the value of the home. What the appraiser will not look for is the age of appliances, interior decor needs, roofing needs or carpet age.

The fair market value helps to establish the starting point in the value of your home.

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