📍 Your inspection looked at the condition of the home. Now your lender needs to look at its value.
The appraisal helps the lender determine whether the property supports the loan amount.
🏠 What Is an Appraisal?
An appraisal is an independent opinion of a property’s market value prepared for the lender as part of the loan process.
The appraiser may consider the property’s size, condition, location, features, recent comparable sales, current market conditions, and other relevant factors.
The appraiser is not there to decide whether they personally like the property. Their job is to develop an independent opinion of value based on the property and available market data.
🔍 An Appraisal Is Not a Home Inspection
These are two very different parts of the buying process.
The home inspection is primarily about the property’s condition and helps you learn more about what you’re buying.
The appraisal is primarily about value and is ordered as part of the lender’s financing process.
Depending on the loan program, an appraiser may also identify certain property conditions that must be corrected before the lender can move forward.
Never rely on an appraisal as a substitute for a home inspection.
💰 Who Pays for the Appraisal?
The appraisal fee can sometimes be included among seller-paid closing costs if the transaction closes and the contract and loan terms allow it.
However, if the transaction does not close for any reason, the buyer is responsible for the appraisal fee.
Your lender may require you to pay for the appraisal in advance, or they may ask you to provide a payment method to keep on file for the fee.
📈 What If the Appraisal Is At or Above the Purchase Price?
That’s usually good news. If the value supports the contract price and the lender has no appraisal-related concerns, we keep moving toward closing.
If the appraisal comes in higher than the purchase price, the buyer does not suddenly owe the seller more money. The contract price remains the contract price.
🔒 Who Gets to See the Appraisal?
The appraisal is provided to the buyer and the lender. The seller and the seller’s agent do not automatically receive the appraised value.
📉 What If the Appraisal Is Below the Purchase Price?
A low appraisal does not automatically mean the transaction is over.
Depending on the contract, the loan, the buyer’s financial ability, and what the seller is willing to do, there may be several possible paths forward.
🔨 What If the Appraiser Requires Repairs?
An appraisal-required repair is different from an ordinary inspection repair request.
If the lender or loan program requires a repair as a condition of financing, the repair must generally be completed before closing.
These repairs cannot simply be negotiated away in the same way as a typical inspection request because the lender may not be able to approve the loan until the required work is completed.
The appraiser may also need to return to the property after the work is complete to verify that the repairs were completed satisfactorily.
This is a financing requirement, not just another repair negotiation.
⏳ What Happens While We Wait?
There may be a gap between the day the appraiser visits the property and the day the completed report is available.
That silence does not automatically mean something is wrong.
Your lender will let you know when the appraisal is complete and whether anything else is needed to keep the loan moving.
🚏 Before We Continue Down the Road...
Here are a few questions buyers often have about appraisals.
💰 Does a higher appraisal mean I have to pay the seller more?
No. The purchase price is determined by the signed contract. A higher appraised value does not automatically change the amount you agreed to pay.
🔒 Will the seller know the appraised value?
Not automatically. The appraisal is provided to the buyer and lender, and the seller or listing agent does not automatically receive the appraised value.
📉 Does a low appraisal automatically cancel the contract?
No. A low appraisal may require us to review the contract, financing, and possible options. There may be a way to renegotiate or restructure the transaction.
📝 Can we challenge a low appraisal?
Your lender may have a reconsideration-of-value process if there is a reason to believe important information was missed or incorrect. That process does not guarantee a different result.
🔨 Can appraisal-required repairs wait until after closing?
Generally, no. If the lender requires a repair as a condition of financing, it usually needs to be completed before closing, and the appraiser may need to return to confirm the work.
🚧 Detour Ahead
A low appraisal does not automatically mean the deal is over.
Sometimes we simply need to look at the numbers, understand the options available under your contract and loan, and determine whether there is another route forward.
We’ll help you understand the road in front of you before you decide which direction to take.