Appraisal
A home appraisal is a licensed appraiser's professional opinion of a property's market value, required by your lender before approving a mortgage. The appraisal protects both you and the lender from paying more than a home is worth. Appraisals typically cost $300–$600 and take 1–2 weeks to complete.
An appraiser visits the property, measures it, notes its condition, and compares it to recently sold homes nearby (called 'comparables' or 'comps'). The final report includes an estimated value supported by those comparables, adjusting for differences in size, age, condition, and features.
If you're buying a home listed at $500,000 but it appraises at $475,000, your lender will only lend based on the $475,000 appraised value. You'd need to either renegotiate the price, cover the $25,000 gap with cash, or walk away. A low appraisal can derail a deal — which is why some buyers include an appraisal contingency in their purchase contract.
For refinances, the appraised value determines your loan-to-value ratio, which affects your interest rate and whether you need private mortgage insurance. A higher-than-expected appraisal can unlock better loan terms; a lower one can complicate or kill the refinance.
Key Takeaway
A home appraisal is a licensed appraiser's professional opinion of a property's market value, required by your lender before approving a mortgage. The appraisal protects both you and the lender from paying more than a home is worth. Appraisals typically cost $300–$600 and take 1–2 weeks to complete.
Related Terms
Frequently Asked Questions
Your lender will only lend based on the appraised value. You'll need to renegotiate the price, pay the difference in cash, or cancel the contract if you have an appraisal contingency.
The buyer typically pays the appraisal fee at closing or upfront, usually $300–$600 depending on the property type and location.
No. An appraisal estimates market value for the lender. An inspection evaluates the home's physical condition for the buyer.
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