11 Frequently Asked Home Appraisal Questions

A home appraisal is a fair and impartial estimate of how much a home is worth. It is used to determine a fair market value for the home, so mortgage lenders like us, are assured the amount we are lending does not exceed the home’s true value. An appraisal is done by a state-licensed professional who is trained to give an unbiased evaluation of the home.

In most cases, the homebuyer pays for the appraisal. The cost varies depending on the location and type of property, but you should expect to pay between $420-$700. The appraisal cost could be included with your closing costs, although some lenders may require you to pay for it up front.

An appraiser is examining the condition of all things permanently part of or attached to the home. This includes the home’s age, square footage, lot size, and location. They are also looking at interior and exterior features including but not limited to walls, floors, the foundation, roofing, and landscaping. Cracks, damages, leaks, and code violations will also be considered.

Keep in mind: an appraisal is not the same as a home inspection. An appraisal is typically ordered by the mortgage company and pertains to value while a home inspection is typically arranged by the buyer and informs them of the home’s condition and its existing and/or potential problems.

The person appraising your home is either from a third-party appraising company or licensed contractor through a state regulatory agency that enforces the Uniform Standards of Professional Appraisal Practice, along with other regulations.

In short, because mortgage companies require one! To ensure that we meet underwriting and investor requirements, we must ensure that the value of the home securing the loan is enough to support the loan amount. We do this by comparing the appraised value against the agreed-upon sale price.

The physical appraisal can take anywhere from one to several hours, depending on property characteristics. However, the entire appraisal process takes longer. Once the physical appraisal is complete, the appraiser creates a written report of findings and submits the report to the mortgage lender usually within 5 to 7 days.

If you’re actively selling your home, there are simple ways to make improvements, such as fixing blemishes like leaky faucets and cracked ceilings. You can also improve your curb appeal by cleaning up landscape overgrowth, repairing broken fences, and repainting your garage door. Check out our article on 8 Easy Ways to Add Value to Your Home for more tips.

An appraisal will determine your home’s lendable value, so the more up-to-date and well-maintained a home is, the higher its value will be. On the flip side, according to Investopedia, the factors below may lower the home appraisal:

• Deferred maintenance
• Dated or undesirable finishes
• Not being up front about needed repairs
• Comparable properties that are “outliers” (e.g., sold to relatives, under duress, or a foreclosure)
• Market conditions
• Appraiser experience

While it’s common for homeowners or homebuyers to disagree with the home value determined by a professional appraisal, it’s not particularly common for appraisers to change their opinion of value. For example, a homeowner can write a letter of appeal to the lender, who can then file an official Value Dispute. The Value Dispute is sent to the AMC to make the appeal to the appraiser. Providing alternate recent closed sales or any factual errors could support a chance to increase the value. However, the appraiser would have to justify why their opinion of value was changed. So, while it is possible to dispute an appraisal, more often than not, a report remains unchanged unless there is concrete proof of an error in the appraisal report. 

You made an offer on a home, the seller accepted, and then the appraisal came in lower than expected compared to the purchase price. Again, lenders do not typically lend borrowers more money than a home is worth, so if your offer is greater than the home appraisal, your journey to closing may be delayed. In this instance, you have a couple options to try to keep the purchase on track. You can ask the seller to lower the price based on the appraisal, or weigh whether getting a second opinion is worth it to you.

If your offer is less than the appraised value of the home, then as a homebuyer, you’re in good spot! While the seller may be thinking they did not price their home high enough, your purchase proceeds as planned!