Home Appraisals 101: Factors an Appraiser Looks At to Determine a Home's Value

An appraiser determines a home's value from five main factors: comparable sales, size and layout, condition and quality, the exterior and lot, and the location and local market. We are Bentley's Real Estate in Newburyport, Massachusetts, and we go over these same factors with our buyers and sellers in Greater Newburyport before an appraiser ever schedules a visit.

What a home appraisal is and why the lender orders one

That visit happens because a lender is involved. A home appraisal is a licensed appraiser's unbiased opinion of a property's market value.

The lender orders it because the house secures the mortgage loan, and the lender won't lend more than the home appraises for.

Most appraisers work from the Uniform Residential Appraisal Report, a Fannie Mae form that sets the scope of what they look at. The finished report goes back to the lender to guide the loan decision.

Appraisals and home inspections are separate steps, so schedule both early.

The five key factors appraisers look at

Once the appraiser is on site, the work comes down to these five factors.

Factor	What the appraiser checks	Typical effect
Comparable sales (comps)	Similar nearby homes sold recently	Sets the baseline
Size and layout	Square footage, bedrooms, bathrooms, flow	More usable space tends to raise it
Condition and quality	Roof, foundation, systems, finishes, upgrades	Issues lower it; quality work helps
Exterior and lot	Curb appeal, lot size, shape, topography	Can add or subtract
Location and market	Neighborhood, schools, parks, supply and demand	Shapes what buyers will pay

Comparable sales

Comparable sales come first, and they anchor most appraisals.

Appraisers usually look at nearby homes within a 1-to-2-mile radius that sold in the last 3 to 6 months, then add or subtract for differences in square footage, room count, lot size, and features.

The comparison should be apples to apples, condos with condos. Case in point: in Greater Newburyport, a home on Plum Island and one in West Newbury sit a short drive apart but rarely make clean comps for each other, which is why we read comps street by street.

Size and layout

The appraiser then measures each comp against your home's size and layout. Total square footage, or gross living area, is a major driver of value.

And the number of bedrooms and bathrooms counts. But here's the thing: a functional layout often matters more than raw space.

Closets, garages, basements, and attics count too.

Finished and unfinished basements are weighed differently.

Before you price, ask how the comps near you handled theirs.

Condition and quality

After measuring the space, appraisers turn to how well it has been kept up. They note the roof, foundation, framing, plumbing, electrical, and HVAC systems, plus flooring, windows, doors, cabinets, and bathroom fixtures.

Upgrades count when the work is quality and meets local building codes. They also note safety items like handrails.

Improvement	What helps	What to watch
Kitchen or bathroom remodel	Appraisers itemize quality upgrades	Work should meet local building codes
New roof or HVAC	Shows major systems are sound	A failing roof can lower value
Fresh paint and small repairs	Shows the home has been cared for	Unresolved safety issues can hold things up

We help sellers put together a dated upgrade list for the appraiser.

Exterior and lot

Walking back outside, the appraiser weighs curb appeal, exterior upkeep, and landscaping. Lot size, shape, and topography matter too.

Location and market

Beyond the property line, location and market conditions round out the picture. Location covers nearness to schools, parks, shops, and transit, plus how desirable the neighborhood is.

Market covers supply and demand. That is, inventory and how fast similar homes are selling.

Unusual or income-producing property may also get the cost approach or the income approach.

What to do when the appraisal comes in low

Even after the appraiser weighs every factor, the final number sometimes lands below the purchase price. Then buyer and seller have to close the gap, and these are the usual options.

Option	Best fit	Tradeoff
Renegotiate the price	The value is well supported	Seller gives up some price
Buyer pays the difference	Competitive market, buyer has cash	More money out of pocket
Request a reconsideration of value	The report has an error or missed comp	Lenders aren't required to grant it
Walk away	The contract has an appraisal contingency	Buyer gives up the house

In Massachusetts, any appraisal contingency belongs in your written offer and Purchase and Sale Agreement, so ask your attorney and lender how to word yours.

How Bentley's helps you prepare

Long before that call to your attorney, you can prepare to head off a low appraisal. Bentley's Real Estate (Bentley's | The RE/MAX Collection) is the #1 brokerage in Greater Newburyport by market share, seven years running.

Our 60+ agents follow recent sales in Newburyport, Amesbury, Newbury, Salisbury, and Rowley, which is why the comps we pull look like the ones an appraiser is likely to use.

Sellers should start with a pricing conversation and an upgrade list. Buyers should ask us how an appraisal contingency fits their offer.

The bottom line

Whichever side of the deal you are on, remember that an appraisal is an opinion built on comps, condition, and current market trends. Curious what yours might be worth?

Call Bentley's at (978) 572-1200.