What Does an Appraisal Do, and When Do I Get One?
The Espresso ShotEverything all at once. Short and strong.
- Your lender orders it, and you usually pay for it, often a few hundred dollars.
- It checks the home’s value, not its condition. That’s the inspection’s job, and you’ll usually want both.
- If it comes in low, you can renegotiate, bring cash for the gap, or split the difference.
An appraisal is a licensed appraiser’s independent opinion of what a house is worth. It happens quietly in the background while your loan comes together, and your lender uses it to be sure the home is worth what you’re borrowing against it. Most of the time, you barely notice it. When the number comes in low, it suddenly matters a lot.
Who orders it, and who pays. Your lender orders the appraisal, and the buyer usually pays for it. (Don’t confuse that with an inspection, which the buyer is responsible for. More on that below.) You don’t get to pick the appraiser, and that’s on purpose: it keeps the opinion independent. The fee is usually a few hundred dollars, and your lender can tell you the amount and when it’s due.
When it happens. After your offer is accepted and your loan is underway, usually within the first couple of weeks. The appraiser visits the house, measures it, notes its condition and updates, and compares it with similar homes nearby that sold recently. Those are the same comps an agent uses to price a house. The report goes to your lender, who shares the result with you.
Not the same as an inspection. An inspection looks at the condition of the house, while an appraisal looks at its value. They answer different questions, and you’ll usually want both. They’re also arranged differently: you choose your own inspector, schedule the visit, and pay for it, while your lender takes care of the appraisal.
If it comes in at or above the price. That’s the easy one. The lender moves forward, and there’s nothing for you to do.
If it comes in low. The lender will only lend based on the lower value, which can leave a gap between the price and the appraisal. You can ask the seller to lower the price, bring extra cash to cover the gap, or split the difference. Your lender can also ask the appraiser to take another look if there are comparable sales they missed. And if your offer included an appraisal contingency, you may be able to step back from the deal. Which one makes sense depends on the house and your budget, so it’s a conversation to have with your agent.
A little planning helps. Some buyers set aside a cushion just in case. You may never need it, but knowing it’s there makes a low appraisal feel like a bump, not a crisis.
Three questions for your lender. “What will the appraisal cost, when will it be ordered, and what happens if it comes in under the price?” Ask those, and you’ll know the whole path.
An appraisal can feel like a test the house has to pass. It’s really a second opinion on the price, and often it simply agrees.