Whether you’re buying, selling, refinancing, or tapping into your home’s equity, a home appraisal is likely to be part of the process. Yet, for many people, the word “appraisal” can feel vague or intimidating. What exactly is it? How does it work? And why does it matter so much?
Let’s take the mystery out of it. In this blog, we’ll break down what a home appraisal is, when you’ll need one, how it’s different from a home inspection, and what to expect from the process.
What Is a Home Appraisal?
A home appraisal is an unbiased estimate of a property’s market value, conducted by a licensed or certified appraiser. This evaluation is used by lenders to ensure they’re not lending more than the home is actually worth.
For example, if you’re buying a home and applying for a mortgage, your lender wants to make sure the house is worth at least as much as the loan amount. After all, the home serves as collateral for the loan. If the value is lower than the agreed purchase price, that could be a problem for the lender—and for you.
When Are Home Appraisals Required?
Home appraisals are typically required during:
- Home Purchases: To confirm the home’s value before final loan approval.
- Refinancing: To reassess your home’s current value and determine if you qualify for new terms.
- Home Equity Loans or Lines of Credit: To calculate how much equity you have available to borrow against.
- Estate Settlements or Divorces: To establish fair market value when assets are being divided.
In some cases—especially for certain government-backed loans like FHA or VA loans—there may be additional appraisal requirements or minimum property standards.
What Does the Appraiser Look At?
The appraiser evaluates a range of factors to determine the home’s fair market value:
- Square footage and layout
- Number of bedrooms and bathrooms
- Condition of the property (inside and out)
- Age of the home and major systems (roof, HVAC, plumbing, etc.)
- Lot size and usable space
- Recent sales of comparable homes (called “comps”) in the area
- Neighborhood location and market trends
They’ll usually conduct a walkthrough of the property, take measurements and photos, and compare your home to similar properties recently sold nearby. Their findings are then compiled into a detailed report that includes the final appraised value.
Home Appraisal vs. Home Inspection
A lot of people confuse appraisals with inspections, but they serve very different purposes:
- Home Appraisal: Focuses on determining the value of the property. It’s primarily for the lender’s benefit.
- Home Inspection: Evaluates the condition of the property, identifying issues that could affect safety or require repairs. It’s done for the buyer’s benefit.
Both can impact your homebuying decision, but only one affects your financing directly.
What Happens If the Appraisal Comes In Low?
This is where things can get tricky. Let’s say you’ve agreed to buy a home for $450,000, but the home appraisal comes back at $425,000. The lender will only lend based on the appraised value, not the purchase price.
Here are a few potential paths forward:
- Negotiate with the seller: Ask them to lower the price to match the appraisal.
- Pay the difference: Cover the $25,000 gap in cash (on top of your down payment).
- Request a second appraisal: If you believe the first was inaccurate, you can appeal or request a new one—though success isn’t guaranteed.
- Walk away: If your offer was contingent on appraisal, you may be able to cancel the sale without penalty.
This scenario underscores the importance of including appraisal contingencies in your purchase agreement.
How to Prepare for a Home Appraisal
If you’re the seller or refinancing homeowner, there are a few things you can do to help ensure your home appraises well:
- Clean and declutter: A tidy space shows better and suggests good maintenance.
- Complete minor repairs: Fix leaky faucets, patch holes in walls, and replace burned-out bulbs.
- Highlight recent improvements: New roof? Renovated kitchen? Let the appraiser know.
- Provide comps if available: If you know of nearby homes that sold recently, especially if they weren’t listed on the MLS, mention them to the appraiser.
- Maintain curb appeal: First impressions count. Trim hedges, mow the lawn, and tidy the entryway.
While you can’t control the housing market or your home’s square footage, a well-maintained and presentable home can positively influence the appraiser’s perception.
How Long Does It Take?
Most home appraisals are completed within a few days to a week, depending on the appraiser’s schedule and the complexity of the property. Once complete, the appraisal report is sent to the lender and sometimes shared with the buyer or homeowner.
The timeline can vary depending on:
- Local demand for appraisers
- Size and condition of the property
- Type of loan being used
If you’re in a competitive market or dealing with a unique property (such as rural land or a custom-built home), the appraisal process may take a bit longer.
What Does a Home Appraisal Cost?
The cost of a home appraisal typically ranges from $400 to $800, depending on the location, size of the home, and loan type. In most cases, the buyer or homeowner pays this fee as part of their closing costs or refinance fees.
Final Thoughts: Why Home Appraisals Matter
A home appraisal plays a critical role in making sure all parties (buyers, sellers, and lenders) have a clear, fair understanding of a home’s value. It protects you from overpaying for a home, helps lenders reduce risk, and serves as a reality check in fast-moving markets.
Whether you’re planning to buy, sell, refinance, or borrow against your equity, understanding how appraisals work can help you prepare—and avoid surprises.
At Strategic Mortgage Solutions, we work closely with appraisers and lenders to ensure our clients are supported every step of the way. If you’re ready to take the next step in your homeownership journey, we’re here to help you make informed, confident decisions.
