Home Appraisal FAQ: What Buyers and Homeowners Should Know

Whether you're buying a home or refinancing the one you have, the appraisal is one of the most important steps in the loan process. It's also one of the least understood. Here are straight answers to the questions I hear most.

What is a home appraisal?

A home appraisal is an independent opinion of a property's market value. Your lender requires one so it doesn't lend more than the home is worth. It also protects you: it's an outside check that the price you're paying, or the value you're borrowing against, is reasonable.

Who performs the appraisal?

A state-licensed or certified appraiser. Appraisers are neutral. Federal rules require that they be independent, so no one involved in the loan, including me, can pressure or influence the value they choose. The appraisal is ordered through the lender, usually via an appraisal management company.

How much does it cost, and who pays?

The cost depends on the property type, size, and location. A standard single-family home generally costs a few hundred dollars, while multifamily properties, large or unique homes, and rural properties can cost more. The buyer or borrower usually pays for the appraisal as part of the loan process, though in a purchase it can sometimes be negotiated with the seller. Your Loan Estimate will show the appraisal fee up front.

How does the appraiser determine value?

• Comparable sales: recent sales of similar homes nearby are the biggest factor.
• Condition: the age and condition of the roof, systems, and interior and exterior finishes.
• Features: square footage, bedrooms and bathrooms, lot size, upgrades, and additions such as an ADU.
• Market trends: whether prices in the neighborhood are rising, stable, or declining.

How long does it take?

The inspection itself usually takes an hour or two. The written report typically arrives within several business days, though timing depends on local demand and property complexity. You're entitled to a copy of the appraisal, and your lender must provide it promptly, generally at least three business days before closing.

What if the appraisal comes in low?

A low appraisal doesn't have to end your purchase or refinance. Common options include:

• Renegotiate the price with the seller, using the appraisal as support.
• Cover the difference (the "appraisal gap") with additional cash.
• Request a reconsideration of value if the report contains factual errors or missed better comparable sales. We can submit that through the lender.
• Restructure the loan, for example by adjusting the loan amount or program.
• Use your contingency: if your purchase contract includes an appraisal contingency, you may be able to cancel. Talk to your real estate agent about your contract's terms and deadlines.

How can homeowners prepare?

• Clean and declutter so the appraiser can see the home's condition clearly.
• Finish small repairs, such as leaky faucets, missing trim, or broken fixtures.
• Make a list of upgrades and improvements with approximate dates and costs.
• Have permits available for additions or conversions.
• Make sure the appraiser can get into every area, including the attic, crawlspace, garage, and any ADU.

Is an appraisal always required?

Not always. Some loans qualify for an appraisal waiver or an alternative valuation, depending on the loan program, the property, and the lender's automated underwriting results. We'll tell you early in the process whether a full appraisal is required for your loan.

This article is for general educational purposes and is not a commitment to lend. Loan programs, guidelines, and eligibility vary by lender and are subject to change. Contact us for advice on your specific situation.