Home Appraisals 101: Factors an Appraiser Looks At To Determine a Home's Value
A home appraiser determines a property's value by checking its condition, measuring its size and layout, weighing its location and features, and comparing it to recent sales of similar homes nearby. For Metro Detroit sellers and buyers, comparable sales usually carry the most weight.
We are MARK Z Real Estate Experts, a Metro Detroit team led by Mark Zawaideh and brokered by eXp Realty. Before any appraiser arrives, we walk our clients through the same factors the appraiser will check.
Why the appraisal matters to your sale or purchase
The appraisal matters because the lender will only lend up to the appraised value, whatever the contract price says.
An appraisal is an independent opinion of value from a licensed or certified appraiser, ordered by the lender because the house secures the loan.
And when the appraised number comes in lower than the sale price, the buyer, the seller, or both have to cover the gap. Before the visit, our team pulls the recent closed sales an appraiser is likely to use, so the report holds fewer surprises.
The key factors appraisers look at
Those closed sales anchor the report, and the appraiser weighs them alongside five other factors.
| Factor | What the appraiser checks | How it can raise or lower value |
|---|---|---|
| Comparable sales (comps) | Similar homes nearby, typically within about a mile and sold in the last 3 to 6 months | Comps set the baseline; adjustments move it up or down |
| Size and layout | Total square footage, lot size, bedrooms, bathrooms, functional floor plan | More usable space usually means a higher value |
| Condition and age | Roof, foundation, walls, windows, flooring, plumbing, electrical, HVAC systems | Structural and mechanical issues matter far more than decor |
| Location and neighborhood | Schools, amenities, demand, busy roads, power lines, commercial areas | The same house can appraise differently a few streets apart |
| Upgrades and features | Kitchen and bathroom remodels, new HVAC, energy-efficient windows, garage, fireplace, pool | Quality improvements are itemized |
| Safety and code | Handrails, fire safety, permits on past remodels | Safety concerns are noted in the report |
Comparable sales
Comparable sales are the biggest factor in most home appraisals.
The appraiser picks recently sold homes similar in size, layout, age, and style, then adjusts for differences like a finished basement or a larger lot.
For example, if a strong comp closed recently and nobody points it out, it may never make the report.
Size, square footage, and layout
After the comps are chosen, size carries heavy weight: total square footage and the number of bedrooms and bathrooms. Above-grade living space is valued differently than below-grade space, so basement improvements rarely add as much value as the same work on the main floor.
Layout counts too: a bedroom reached only through another bedroom or a cramped kitchen can lower the overall valuation.
Condition and age of the house
Square footage shows how much house there is; condition shows what shape it is in, from the roof, foundation, windows, flooring, plumbing, and electrical systems to any water damage, cracks, or leaks.
A well-maintained older home can appraise just as well as a newer one.
Fixing small items like a dripping faucet or peeling paint before the visit keeps the report clean.
Location and neighborhood
Repairs are within your control, but location is the one factor no homeowner can change. Schools, parks, and shopping nearby help, while a highway or commercial area next door can lower value.
Across the Metro Detroit market, school districts and commute routes often explain price gaps between similar houses.
Upgrades, materials, and quality
Where location sets the ceiling, upgrades decide how close a house gets to it. Improvements such as renovated kitchens and bathrooms, newer HVAC systems, upgraded appliances, and insulated windows can increase value.
The quality of materials matters. And so does how the upgrade compares with similar homes in the neighborhood, which the comps reveal.
One easy win: a written list of improvements with approximate dates helps the appraiser credit work they might otherwise miss.
The three valuation methods appraisers use
Once every factor is noted, the appraiser turns it into a number using one of three methods, and sales comparison drives most single-family purchase loans.
| Approach | How it works | Best fit |
|---|---|---|
| Sales comparison | Compares the property to similar homes that recently sold | Most single-family homes |
| Cost approach | Estimates the cost to rebuild, minus depreciation, plus land | New or unique homes |
| Income approach | Values the property on the rental income it can generate | Investment and multi-family properties |
What the appraisal means for sellers vs buyers
That number lands differently on each side of the deal: it confirms the seller's price and protects the buyer from overpaying with borrowed money.
| Sellers | Buyers | |
|---|---|---|
| Upside | Supports a well-priced home | Protection from overpaying |
| Downside | A low appraisal can force a price cut or renegotiation | A low appraisal can mean more cash at closing |
| What helps most | Pricing from recent comps, repairs done, an upgrades list | An appraisal contingency and a plan for a gap |
What to do if the appraisal comes in low
That downside is not always final, because a low appraisal can be challenged. Buyers and sellers can request a reconsideration of value through the lender when the report has factual errors or missed better comparable sales, though lenders are not required to grant it.
The other options include renegotiating the price, the buyer covering part of the gap, or splitting the difference.
Things most people do not consider before an appraisal
You shape much of the report in the weeks before the visit.
- Clear access to the attic, basement, furnace, and electrical panel makes the inspection smoother.
- Curb appeal sets the tone, so a tidy yard and clean entry help.
- Unpermitted work can raise questions about code compliance.
- A list price based on recent comps is easier for an appraiser to support.
How our team helps with your home appraisal
Our work starts with that last point. When we list a home, we price it from recent closed sales near the property so the appraisal is more likely to support the contract.
We give sellers a repair list and an upgrades sheet, and we walk buyers through appraisal contingencies before they write an offer.
Curious what your home might appraise for? Request a home valuation from Z Real Estate Experts at eXp Realty, or call our Novi office at (248) 890-7077.