A home appraisal is a required step in nearly every mortgage transaction. Understanding the process helps you prepare — and handle problems if they arise.
What Is a Home Appraisal?
| Aspect | Details |
|---|---|
| Purpose | Determine fair market value for the lender |
| Who orders it | The lender (after loan application) |
| Who pays | The buyer (typically $350-$600) |
| Who performs it | Licensed/certified appraiser (independent from lender) |
| Duration | 1-2 hours on site; report in 3-10 business days |
| Required for | All purchase mortgages and most refinances |
| Not required for | Cash purchases, some VA streamline refis, waiver-eligible loans |
Appraisal Costs
| Appraisal Type | Typical Cost | When Used |
|---|---|---|
| Standard single-family | $350-$500 | Most conventional purchases |
| FHA appraisal | $400-$550 | FHA loans (additional health/safety checks) |
| VA appraisal | $425-$600 | VA loans (set by VA fee schedule) |
| Rural property | $450-$700 | Limited comparable sales |
| Multi-family (2-4 units) | $500-$800 | Investment/multi-family properties |
| Condo | $350-$500 | Additional condo-specific review |
| Luxury/estate ($1M+) | $600-$1,500 | Complex, unique properties |
| Desktop appraisal | $75-$200 | Lender-approved (no physical visit) |
| Drive-by appraisal | $150-$300 | Exterior-only (refinances) |
What Appraisers Evaluate
Exterior Assessment
| Factor | What They Look At |
|---|---|
| Lot size and location | Compared to neighborhood |
| Condition of exterior | Roof, siding, foundation, gutters |
| Landscaping | General curb appeal |
| Driveway/garage | Condition and type |
| Outbuildings | Sheds, barns, pools |
| Neighborhood | Quality, proximity to amenities, zoning |
Interior Assessment
| Factor | What They Look At |
|---|---|
| Square footage | Measured and verified |
| Room count | Bedrooms, bathrooms, living areas |
| Kitchen and bathrooms | Condition, updates, functionality |
| Flooring | Type and condition |
| HVAC system | Type, age, working condition |
| Plumbing and electrical | Adequate and functional |
| Structural integrity | Foundation, walls, ceiling |
| Basement/attic | Finished vs. unfinished, condition |
| Safety issues | Smoke detectors, handrails, hazards |
Market Analysis (Comparable Sales)
| Element | Methodology |
|---|---|
| 3-6 comparable sales (“comps”) | Similar homes sold within 6-12 months |
| Proximity | Ideally within 1 mile (0.5 mile preferred) |
| Adjustments | +/- for differences (bedroom count, garage, pool, updates) |
| Market conditions | Active listings, days on market, trends |
| Final value opinion | Based on adjusted comparable sales |
How to Prepare for an Appraisal
| Action | Impact | Priority |
|---|---|---|
| Deep clean the entire home | Creates positive impression | High |
| Complete minor repairs (leaky faucets, chipped paint) | Shows well-maintained home | High |
| Ensure all systems work (HVAC, lights, appliances) | Appraiser tests these | High |
| Provide list of improvements with costs and dates | Ensures appraiser accounts for upgrades | High |
| Mow lawn, trim hedges | Curb appeal matters | Medium |
| Clear clutter, especially from rooms being measured | Accurate square footage | Medium |
| Unlock all areas (attic, basement, garage) | Appraiser needs full access | High |
| Have comparable sales ready (just in case) | Can share with appraiser | Low |
What to Do If the Appraisal Comes in Low
About 8% of purchase appraisals come in below the contract price.
Your Options
| Option | How It Works | Best When |
|---|---|---|
| Renegotiate price | Ask seller to lower price to appraised value | Buyer’s market, seller motivated |
| Split the difference | Buyer and seller each cover half the gap | Both parties want the deal |
| Appraisal gap coverage | Buyer pays the difference in cash | Competitive market, strong buyer |
| Challenge the appraisal | Submit comparable sales to lender for reconsideration | Appraiser missed relevant comps |
| Request second appraisal | Order a new appraisal (buyer pays again) | First appraisal appears flawed |
| Walk away | Use appraisal contingency to cancel contract | Gap is too large, better options exist |
Appraisal Challenge Process
| Step | Action |
|---|---|
| 1 | Review the appraisal report for errors (wrong square footage, missing features) |
| 2 | Gather 3-5 better comparable sales your appraiser may have missed |
| 3 | Submit a Reconsideration of Value (ROV) request to the lender |
| 4 | Lender forwards to appraiser for review |
| 5 | Appraiser may adjust value, maintain value, or explain reasoning |
| 6 | If unsuccessful, consider second appraisal or renegotiation |
FHA and VA Appraisal Differences
| Requirement | Conventional | FHA | VA |
|---|---|---|---|
| Standard property assessment | ✅ | ✅ | ✅ |
| Health and safety inspection | ❌ | ✅ (extensive) | ✅ |
| Peeling paint must be addressed | No | Yes (if pre-1978 home) | Yes |
| Handrails on stairs | No requirement | Required | Required |
| Working utilities required | Preferred | Required | Required |
| Minimum property standards | No | Yes (HUD standards) | Yes (VA MPRs) |
| Termite inspection | Not required | Required in some states | Required |
| “Sticky” value (stays with property) | No | Yes (6 months) | Yes (6 months) |
| Repair requirements before closing | Rare | Common | Common |
Appraisal Waivers
Some loans don’t require a traditional appraisal:
| Waiver Type | Requirements | Lender |
|---|---|---|
| Automated Appraisal Waiver | Strong LTV, good credit, recent data | Fannie Mae/Freddie Mac |
| Desktop Appraisal | Appraiser reviews data without visiting | Various |
| Property Inspection Waiver (PIW) | Fannie Mae’s AVM-based waiver | Fannie Mae |
| VA IRRRL (refinance) | Streamline refinance, no appraisal | VA |
| FHA Streamline (refinance) | Streamline refinance, no appraisal | FHA |
Related: Average Closing Costs | First-Time Home Buyer Programs | PMI Guide | Mortgage Payment Calculator