Homebuying

Home Appraisal Guide

What happens during a home appraisal, how values are determined, and what to do if the appraisal comes in low.

NMHL Team2026-01-119 min read

Appraisal Basics

A home appraisal is an objective assessment of a property's market value conducted by a licensed appraiser. Lenders require appraisals to ensure the property is worth at least the amount being borrowed. The appraisal protects both the lender and the buyer from overpaying for a property. Appraisers consider the property's condition, size, location, recent comparable sales in the area, and any improvements or deficiencies. The resulting appraisal report provides a professional opinion of the home's fair market value, which plays a critical role in determining your final loan amount.

The appraisal is ordered by your lender but paid by you, typically costing $350-$600 for a single-family home.

The Appraisal Process

The appraisal process begins when your lender orders the appraisal through an appraisal management company. A licensed appraiser visits the property and conducts a thorough inspection, measuring the home, noting its condition, photographing key features, and assessing any improvements or repairs needed. The appraiser then researches recent comparable sales, typically homes sold within the last 6 months in the same area with similar characteristics. Using these comparables and their professional judgment, they determine the property's market value. The entire process typically takes 7-14 days from the order date to delivery of the appraisal report.

Key Tips

  • Ensure the home is clean and accessible for the appraiser's visit
  • Provide a list of recent improvements or upgrades with costs if available
  • Make sure all areas of the home are accessible including the attic, basement, and garage

What If the Appraisal Comes In Low?

A low appraisal occurs when the appraised value is less than the purchase price. This is one of the most common complications in real estate transactions. You have several options: negotiate with the seller to reduce the purchase price to the appraised value, pay the difference out of pocket as additional down payment, challenge the appraisal by providing additional comparable sales data to the lender, request a second appraisal if you believe the first was inaccurate, or walk away from the deal using your appraisal contingency. The right choice depends on your financial situation, the local market, and how much you want the home.

Approximately 8-10% of home appraisals come in below the contract price. Having an appraisal contingency in your offer protects you in this scenario.

Preparing for Your Appraisal

While you cannot control the appraised value, preparation can help ensure a smooth process. If you are the seller, make minor repairs like fixing leaky faucets, replacing broken fixtures, and touching up paint. Ensure the home is clean and well-maintained. Prepare a list of improvements and upgrades you have made. As a buyer, trust the process and know your options if the appraisal comes in low. Your real estate agent can provide comparable sales data to share with the appraiser if appropriate. Understanding the appraisal process reduces anxiety and helps you navigate any challenges that arise.

Key Tips

  • Curb appeal matters so ensure the exterior is clean and landscaped
  • Address any obvious safety issues before the appraisal visit
  • Have documentation ready for any recent renovations or improvements
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First-Time Homebuyer Guide

Understanding the full homebuying process.

Closing Costs Explained

Appraisal fees are part of your closing costs.

Home Equity Guide

How appraisals factor into home equity calculations.

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Frequently Asked Questions

A typical single-family home appraisal costs $350-$600. Multi-family properties, larger homes, or complex properties may cost more. FHA and VA appraisals may be slightly higher due to additional inspection requirements. The cost is paid by the buyer as part of closing costs.

As a buyer, you are typically not present during the appraisal. The appraiser needs to conduct an independent assessment. Your real estate agent may provide comparable sales data to the appraiser. The seller or their agent usually provides access to the property.

Most conventional appraisals are valid for 120 days. FHA appraisals are valid for 180 days with a possible 30-day extension. VA appraisals are valid for 6 months. If your appraisal expires before closing, a new appraisal or update may be required.

Related Resources

First-Time Homebuyer Guide

Understanding the full homebuying process.

Closing Costs Explained

Appraisal fees are part of your closing costs.

Home Equity Guide

How appraisals factor into home equity calculations.

Conventional Loans

Conventional loans are not backed by government agencies and typically offer the most flexibility for qualified borrowers. With options for as little as 3% down and the ability to cancel mortgage insurance, conventional loans are ideal for borrowers with good credit.

FHA Loans

Federal Housing Administration (FHA) loans are government-backed mortgages designed to help first-time homebuyers and those with less-than-perfect credit achieve homeownership. With lower down payment requirements and flexible credit guidelines, FHA loans make homeownership accessible to more Americans.

VA Loans

VA loans are a benefit earned by veterans, active-duty service members, and eligible surviving spouses. Backed by the Department of Veterans Affairs, these loans offer unmatched benefits including no down payment, no mortgage insurance, and competitive rates.

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