Key Takeaways
- An appraisal is an independent estimate of the home’s market value, required by your lender.
- It protects the lender (and you) from overpaying.
- A low appraisal can be renegotiated, disputed, or covered with extra cash.
- It’s different from a home inspection, which checks condition.
The appraisal is one of the last hurdles before closing — and a low one doesn’t have to kill your deal. Here’s how it works.
What is a home appraisal?
A licensed appraiser evaluates the home and comparable recent sales to estimate its market value. Your lender requires it to make sure the home is worth what they’re lending — it’s a safeguard for both of you.
What happens if the appraisal comes in low?
You have options: renegotiate the price with the seller, bring extra cash to cover the gap, challenge the appraisal with better comparable sales, or walk away if you have an appraisal contingency. A low appraisal is a negotiating moment, not a dead end.
How is an appraisal different from an inspection?
An appraisal estimates value; a home inspection checks the home’s condition. Lenders require the appraisal; the inspection is for your protection as a buyer.
Frequently Asked Questions
Who pays for the appraisal?
The buyer typically pays, often a few hundred dollars, usually collected during the loan process.
Can I dispute a low appraisal?
Yes. You can submit a reconsideration of value with stronger comparable sales or point out factual errors.
Does the appraisal have to match the sale price?
It needs to support the loan amount. If it comes in at or above the price, you’re fine; if below, you renegotiate or cover the difference.
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