How To Read An Appraisal
The form, explained

Your appraisal is a form. Here is what each part of it means.

Most residential appraisals come back on the same document, Fannie Mae Form 1004. It looks dense because it is built for underwriters, not for the person paying for it. It has eight sections, and each one answers a single question.

Read them in order and you can check the report yourself.

A printed property report lying on a wooden desk beside a pen and a yellow highlighter, lit by soft window light.
The walkthrough

Eight sections, in the order they appear

The notes beside each section flag the parts people misread most.

1

Subject

Identifies the property, the owner of record, the legal description, the assessor parcel number and who ordered the report. It also states the intended use and the intended user, which is almost always the lender.

Check thisAddress, parcel number and legal description. A typo here follows the report everywhere.
2

Contract

On a purchase, the appraiser records the contract price, the date and whether any seller concessions were involved. On a refinance this section is usually marked as not applicable.

Common mistakeThe appraiser seeing the contract price is normal and expected. It does not mean the value was set to match it.
3

Neighborhood

Describes the surrounding market. Boundaries, whether values are rising, stable or declining, typical marketing time and the usual price range for the area.

Check thisThe market trend box. It explains much of how the later adjustments were made.
4

Site

The lot itself. Size, shape, zoning, utilities, easements and whether the site sits in a special flood hazard area.

Check thisZoning compliance. A lender will look closely at a legal nonconforming note here.
5

Improvements

The structure. Age, design, foundation, room count, condition and quality ratings, updates, and the gross living area.

Read carefullyGross living area is finished, heated space above grade. A finished basement still adds value. It is just counted separately from living area.
6

Sales comparison approach

Residential reports lean on this section most. Recent sales of similar nearby property sit in columns next to yours, and the appraiser adds or subtracts value for each difference.

Read carefullyAn adjustment reflects what the market pays for a difference. It is not what the feature cost to build.
7

Reconciliation

The appraiser explains which comparable sales carried the most weight and why, then states the final opinion of value and its effective date.

Check thisA value is an opinion as of a specific date. It is not a forecast and it does not carry forward.
8

Certification and addenda

Signatures, license number and expiry, the assumptions the report rests on, photographs, the sketch, the location map and any extra commentary.

Worth readingThe addendum is where an appraiser explains anything unusual. It is often the most useful page in the file.
If the number looks wrong

What you can do about it

You cannot appeal an opinion. You can supply facts the appraiser did not have.

The formal route is a Reconsideration of Value, usually shortened to an ROV. It goes through the lender, not directly to the appraiser, because appraiser independence rules keep you from contacting them about value.

An ROV works when you bring something specific: closed sales the report missed, a wrong room count or square footage, or a permit for work the report left out. It does not work when the only argument is that the number feels low.

Get the facts together first, then send them through whoever ordered the appraisal.

Ask somebody who does this

When you want an appraisal of your own

Sometimes you want your own opinion of value, say before listing, after a renovation or while settling an estate.

National

Pocket Appraisal

Pocket Appraisal is a national residential appraisal service. When you want a report on your own home, you can reach out there directly.

ask Pocket Appraisal for a residential appraisal
Questions

Common questions about appraisal reports

What is Form 1004?
Form 1004 is the Uniform Residential Appraisal Report, the standard form for a one unit residential property with a full interior and exterior inspection. Most lender ordered home appraisals arrive on it, which is why appraisal reports all look broadly alike.
Why is my finished basement not in the square footage?
Gross living area counts finished, heated space above grade. Below grade finished space is reported separately. It still carries value and the appraiser accounts for it in the adjustments, but it does not get added to the living area figure.
Can I talk to the appraiser about the value?
Not directly about the value. Appraiser independence rules exist to stop the lender, the agent and the borrower from influencing the outcome. Questions and additional sales go through whoever ordered the report, normally the lender or an appraisal management company.
Is an appraisal the same as a home inspection?
No. An appraisal is an opinion of market value and notes condition only where it affects that value. A home inspection examines the systems and components of the house and gives no opinion of value. Many buyers get both.
How long is an appraisal good for?
The value has an effective date and describes the market as of that date. Lenders set their own limits on how old a report can be before it needs updating, and those limits vary by loan program. Treat the value as a snapshot.
More on this topic

Go deeper into the report

Get in touch

Stuck on a line in your report?

Describe the section that is not making sense. Leave out any personal detail you would rather not send.