Right the appraiser looks at the following:
1.) comparable sales
2.) s/he also calls agents with Pending homes to figure out the trends, as to multiple offers,
whether over list, all cash , or loans etc.
3.) an appraisal for a Refinance is quite different than that of a Home Purchase.
4.) What the entire neighborhood is doing also helps.
If the appraisal came back and you don't agree with the value, you can work with your realtor to appeal the appraisal by providing comps that you think are more relevant. Hope this helps!
But why are you asking?
Ideally, I'd like all of my sales on the same street, same side of the road, same design and appeal, same square footage... and then I woke up, because that is a dream.
I shoot for one to two sales that are recent, similar in location, design, amenties, but in most cases, five things will determine your home value. My website is the best to expain exactly how appraisers find comparable sales and what the most important data is.
How an Appraisal is made:
Visualize a series of COLUMNS, probably 4 or 5;
The First Column is the SUBJECT HOUSE and the others are COMP's.
Down the page we list FEATURES or FACTORS; such as # Bedrooms, # Baths, House Sqft, Lot Sqft, Fireplace, Pool, Roof, Garage, Fencing. Got it?
Now, in each box created, there will be a VALUE: Lets say the subject house is 915 sqft it would get --- or 0. And the first Comp house has 2500 sqft, it might get -100,000; which means that the house is WORTH $100,000 more because of the square-footage. (It is a negative number because the Selling price of that Comp house was approximately $100,000 more BECAUSE of the square footage and we have to deduct that $100,000 to bring them to equity.) Got it?
Now, lets say that the Subject house has $5,000 worth of new fencing and the Comp house has 25 year old OK fencing.: Then the SUBJECT house would get +5,000 and the Comp. house would get --- or 0.
When you go down the page, and enter everything, you get total Comparative Values on the two houses, which allows for the DIFFERENCES.
The two houses DO NOT have to be literally COMPARABLE, they MAKE then comparable with the VALUES.
So the house next door is larger, so what? They made up for that with the values.
Now, if you understand what I just did, then you will understand why;
1.) Two Appraisals can come so close together, and,
2.) Why the Bank will not listen to you about the results.
and in fact I will give you a third;
3.) If you hire your own Appraiser, he will end up with about the same numbers!
Also, please do not compare/equate the ASSESSMENT with the APPRAISAL: The ASSESSMENT is based on the LAST SELLING PRICE OF THE PROPERTY which might be last year. five years ago, or thirty years ago.
I hope I've helped.