Home Appraisal Explained: What It Is, What It Costs, and What to Do If It Comes in Low

A home appraisal is an independent professional assessment of your home's market value. Lenders require one for almost every mortgage — they won't lend more than the appraised value. Understanding how appraisals work, what appraisers look for, and what to do when one comes in low can save your purchase or refinance.

Why Lenders Require Appraisals

The lender's goal is to ensure the collateral (your home) is worth at least the loan amount. If you default, the lender needs to recover the loan by selling the property. If you pay $400,000 for a home worth $370,000, the lender is at risk. The appraisal protects them — but as the buyer, you pay for it.

What Appraisers Look At

• Comparable sales (comps): Recent sales of similar homes within the same area. The core of the appraisal.
• Property condition: Interior and exterior condition, deferred maintenance, updates.
• Size and layout: Square footage, number of bedrooms and bathrooms, lot size.
• Location factors: Neighborhood, proximity to amenities, school district.
• Improvements: Updated kitchen, bathrooms, HVAC, roof age.
• Unique features: Pool, basement, garage, views.

The Appraisal Process

After your offer is accepted, your lender orders an appraisal from an independent appraiser (you cannot choose your own for a purchase). The appraiser visits the property for 30–90 minutes, taking photos and measurements. They then research comparable sales and write a report, typically within 1–2 weeks. You receive a copy before closing.

What an Appraisal Costs

Appraisals typically cost $300–$600 for a standard single-family home. More complex properties, larger homes, or rural locations can cost $700–$1,200+. You pay this upfront (often at application or before the appraisal is ordered) regardless of whether the deal closes.

What to Do If the Appraisal Comes in Low

• Negotiate with the seller: Request the seller lower the price to the appraised value. In a buyer's market, many sellers will agree.
• Make up the difference in cash: Pay the gap between appraised value and purchase price out of pocket (appraisal gap coverage).
• Request a reconsideration of value (ROV): If you believe the appraiser used poor comps or missed upgrades, your lender can submit an ROV with supporting evidence.
• Challenge the appraisal: Work with your agent to provide documentation of comparable sales the appraiser may have overlooked.
• Walk away: If you have an appraisal contingency in your contract and can't reach agreement, you can exit the deal and recover your earnest money.