Property appraisals in the US
Author:
Kata Hahn
What is a property appraisal and why do you need it?
There are many situations that require a property appraisal, including when:
- Applying for a mortgage loan
- Applying for a loan and using your home as security
- Buying or selling a property
- Refinancing a mortgage loan
- Determining insurance premiums
- Settling an estate, divorce, or litigation
Usually, after a seller accepts a buyer’s offer, the lender will then order a property appraisal to determine how much they will lend the buyer. Most mortgage loans require an appraisal. Specifically, federal loan programs require them as protection for the lender, in case the borrower can’t pay the mortgage back and the property has to be sold. From the point of view of buyers and sellers, a property appraisal is important so that both parties know what the property is worth in the current market before entering into a contract. Especially as a buyer, you don’t want to pay more than a property is worth. When refinancing a mortgage loan, an appraisal is just another required step during the loan process before you can get approved.
You may have also heard the term property valuation. Property appraisal and property valuation are often used interchangeably but are technically different processes. Property appraisal only refers to the estimate of a property, is usually done for free by a real estate agent, and doesn’t entail a formal report. On the other hand, property valuation is when a qualified professional assesses a property and writes up a formal report. This process costs money and the determined value can have legal standing. Real estate appraisers, the qualified professionals, actually carry out property valuations (which are also referred to as property appraisals). You can see why these two terms cause confusion. In this article, we’ll use both property appraisal and property valuation to refer to the official assessment process and formal report that determines a property’s market value.
Requirements and documentation for property appraisals in the US
If you’re a homeowner, the documents you need for the appraisal process include:
- Any home improvements in the past 15 years: remodels, upgrades, and additions
- Including costs and completion dates
- Copies of previous appraisals, if applicable
- Noting any inconsistencies, such as large fluctuations in value
- Blueprints, floorplans, or a property survey
- The comparative market analysis (CMA) from your realtor
- List of neighborhood amenities - any new infrastructure added since your home purchase
- HOA documents, if you live within a homeowner association
- Any home inspection reports
- Any non-permitted additions
- Any easements or encroachments
- Other documents relevant to your home’s value
- Personal research on comparable properties
- Information about any offers (partial or full disclosures)

The certified appraiser will provide the documentation required to complete the appraisal process on their end; however, having the above information accessible can help speed up the process and ensure that the calculated market value is as accurate as possible. Depending on which appraisal method is used, other documents may be required such as rental data documents. We’ll cover the most common appraisal methods when we discuss property evaluations below.
The different types of values appraised
Here are some of the main types of values:
- Market value - exchange value between a buyer and seller
- Value-in-use - cash flow that the property generates under a specific use
- Investment value - value to an investor
- Insurable value - value covered by an insurance policy
- Liquidation value - the standard of value in bankruptcy proceedings
- Assessed value - determines state taxes (varies greatly by state)
- Potential future value - value accounting for expected cash flows of rental properties
Evaluation: what influences a property’s value?
An appraiser evaluates many factors of a property, some of the most important include:
- Age
- Location
- Access to public transport, hospitals, schools, parks, and grocery stores
- Crime rates
- Size
- Square footage, number of rooms, and number of windows
- Interior conditions
- Construction quality
- Appliances
- Aesthetics
- Exterior conditions
- Curb-appeal
- Size of lot
- Landscaping
- Current real estate market trends
- What’s desirable in the market?
- Supply and demand of properties
- Building regulations
- Adverse conditions or problems (e.g. mold, leaks, termites)

Contrary to popular belief, housekeeping skills don’t influence a property’s value at all. While tidying up spaces can’t hurt an appraiser’s evaluation, it shouldn’t have any positive or negative effect since these are just temporary conditions. However, if perpetual uncleanliness has caused other problems, these could certainly have an impact on the value. An appraiser may request an expert if adverse conditions are found and need to be inspected. Overall, an appraiser is just evaluating how a property looks and not going as in-depth into the functioning of appliances, heating, or cooling systems, as a home inspector would.
The property appraisal process also differs based on the type of loan, with specific lender and underwriter-approved forms used accordingly. Conventional loans usually require basic checks regarding the condition and quality of the home. Housing and Urban Development (HUD) loans, such as FHA and USDA loans, require additional inspections since they are government-backed. VA loan appraisals follow a slightly different process with a notice of value (NOV) issued after the appraisal report is reviewed. All government loans (FHA, USDA, and VA) require additional inspections that are more in-depth than the typical surface-level judgments an appraiser would make for a conventional loan. There are a few different types of appraisal methods when it comes to estimating the value of a property.
Here are the main types of appraisal methods:
- Sales Comparison Approach
Compares the property to 3+ similar properties that have recently sold. Adjusts these sales prices based on the differences from the property being appraised.
- Cost Approach
Estimates the cost to rebuild the house while accounting for physical, functional, and external depreciation. Adds on the value of the land.
- Income Approach
Used for 1-4 unit income-producing properties. Compares recent sales and income data from 3+ similar rental properties.

It’s clear that there are many different factors that a property appraiser considers when evaluating a property and determining its market value. Some of the factors are the same for all types of properties, but it’s important to identify your specific situation, loan type, and property use so you know exactly what to expect during the appraisal process.
What does an appraisal report contain?
While it’s not required for the report to be completed using the URAR, all appraisal reports must contain the following information:
- Sufficient information to understand how the market value was determined
- An accurate description of the property
- Narrative comments as necessary to explain rationale
- Analysis of any property transactions in the past 3 years
- A Sales Comparison section (the “grid”) to characterize the property and the chosen comparable properties
- UAD Definitions Addendum - if the report must comply with the Uniform Appraisal Dataset and abbreviations/codes are used
- Appraiser signature
You’re entitled to copies of your valuation report. If you’re getting an appraisal for loan purposes, you’re entitled to receive the report no later than 3 days before loan settlement.
Fannie Mae and Freddie Mac are currently undertaking a Uniform Appraisal Dataset (UAD) and Forms Redesign initiative to develop an updated URAR. They expect the redesign process to be a multi-year process.
Who does property appraisals in the US?
The types of appraiser licenses include:
- Licensed appraiser
- For 1-4 unit residential properties up to $1 million
- Certified residential appraiser
- For 1-4 unit residential properties of any price
- Certified general appraiser
- For residential or non-residential properties with no limits on size or value
When an appraisal is required as part of a loan process, the lender will usually hire an appraiser from their contact list or one that works for their company. However, the buyer is responsible for paying the appraisal fee. The national average is around $348 but varies from state to state.
An Appraisal Management Company (AMC) specializes in appraisal processes and usually has multiple appraisers on its team that can be hired by lenders, buyers, or any interested party. Some companies have a specific focus, such as residential or commercial properties only. You’ll need to find a suitable company and licensed appraiser depending on your property purpose, size, and value.
Here’s a list of some highly-ranked appraisal companies in the US:
- Cullen Real Estate and Appraisal Company
- Home Value Inc.
- AmeriMac Appraisal Management
- Dade Appraisals
- Chicagoland Appraisals
- ExcelAppraise
- Home Appraisals Inc.
- Core Logic
- U.S. Bank
- Wells Fargo
Some companies only offer appraisal services in certain states, so you may want to check out additional lists to find the right company for your situation.
Here are some other resources to help you find appraisal companies in the US:
- Links to company lists by state and state regulating agencies
Going forward
A property appraisal is especially important when it comes to mortgage loans, equity loans, and refinancing since most lenders require an appraisal before you can get approved for a loan. But before you can even start the appraisal process, you need to find a property and then choose a mortgage loan program. Kredium can help, from your property search all the way to financing your purchase. We are an international real estate and mortgage broker company that can help US citizens, residents, and non-residents get a mortgage loan for a US property that works for them. Kredium can also help you search for properties abroad and obtain an international mortgage loan. You can use our mortgage calculator to see an initial overview of your total loan amount and monthly payments. Our professionals are here to guide you, all you need to do is sign-up to get in touch today.
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