Appraisal: A professional estimate of a property’s current market value, conducted by a licensed or certified appraiser and based on factors such as the home’s condition, size, location, and recent comparable sales nearby.
Homeowners most commonly encounter an appraisal when buying or refinancing a home. In most purchase transactions, a lender will require an appraisal before approving a mortgage to confirm that the loan amount is reasonably supported by the property’s value. During a refinance, the same logic applies: the lender typically wants assurance that the home is worth enough to secure the new loan terms. Appraisals can also come up in other situations, including estate settlements, tax disputes, or home equity loan applications. The cost of an appraisal is generally paid by the borrower and can typically range from a few hundred dollars to over a thousand, depending on the property type, location, and complexity, though actual costs vary widely.
Watch for: If an appraisal comes in lower than the agreed purchase price, it can affect how much a lender is willing to finance. For example, a lender may only approve a loan based on the appraised value rather than the contract price, which could require the buyer to cover the difference out of pocket or renegotiate with the seller. Appraisal outcomes depend heavily on local market data and the individual appraiser’s analysis, so results are not guaranteed.
HomeRule is not a lender, appraiser, or financial advisor. This entry is for general informational purposes only.
See also: Home Equity, Refinance, Closing Costs