How Does House Appraisal Work?

The most common tools used in house appraisal to determine a home’s market value is the Multiple Listing Service (MLS) and a home appraiser’s local computerized database.

The MLS is primarily a real estate agent’s tool and contains a listing of all the homes that are for sale in a given community. The listings will include information such as:

• Location
• Price
• Special features (if any)

The MLS also keeps track of home sales in the area. Appraisers can use the service to identify homes similar to those that are being appraised and use them in cost comparisons when conducting a house appraisal.

Appraisal companies also generally keep an updated computerized database of homes that have already been appraised. Appraiser members can access this information for comparison purposes and to establish market trends.

Traditionally, appraisers have been conservative in giving dollar-cost benefits to housing design innovations, and slow to recognize and credit the energy efficient features of homes in their house appraisal reports.

A primary reason for this has been a lack of market data showing how energy efficient features of a home influence the sales price. However, this is now beginning to change and appraisers are also starting to take note. This is why establishing an industry-backed standard method of measuring and labeling the relative energy efficiency of a home is absolutely vital.

Talk to your local certified RESNET Home Energy Professional to get more information about how making your home more energy efficient can affect its value.