What to Expect From a Home Appraisal (and Why It Matters)

When you're buying your first home, or refinancing your current one, one important step can make or break the deal: the home appraisal. It might not be the most glamorous part of the process, but it plays a key role in determining how much a lender is willing to offer—and can even impact your negotiations and closing timeline.

Whether you’re a first-time buyer, seasoned homeowner, or someone preparing to refinance, understanding how home appraisals work can help you move through the process more confidently and avoid surprises.

In this post, we’ll break down what a home appraisal is, why it matters, how it’s different from a home inspection, and what you can expect at every stage.

What Is a Home Appraisal?

A home appraisal is an unbiased, professional assessment of a property’s market value, conducted by a licensed appraiser. Mortgage lenders require an appraisal to ensure the loan amount they’re providing doesn’t exceed the fair market value of the home. It’s a way to protect the lender—and you—from overpaying for a property.

During the appraisal, the appraiser evaluates the home based on a number of factors, including:

Location and neighborhood
Size, layout, and overall condition
Recent improvements or upgrades
Comparable home sales (also called “comps”) in the area
Current market conditions

Once the appraisal is complete, the appraiser delivers a detailed report with a final estimated value for the home.

Why Do Home Appraisals Matter?

1. They Determine Your Loan Amount

Lenders typically won’t approve a mortgage for more than the appraised value of the home. If the home appraises for less than the agreed-upon purchase price, you may need to renegotiate with the seller or come up with the difference out of pocket.

2. They Protect You From Overpaying

The appraisal helps ensure you’re making a smart investment. Even if you’re emotionally attached to a property, it’s helpful to know whether the price reflects its true value.

3. They’re Required for Most Home Loans

Unless you’re buying a home with all cash, a home appraisal is almost always a required part of the mortgage process. This applies to conventional loans, FHA loans, VA loans, and refinances.

What’s the Difference Between an Appraisal and a Home Inspection?

While both involve assessing the property, a home inspection focuses on the condition of the home’s structure and systems (like the roof, plumbing, and electrical), while a home appraisal focuses on the home’s value in the current real estate market.

In short:

Inspection = Is the home in good shape?
Appraisal = What is the home worth?

Both are important, but they serve different purposes in the home buying process.

How the Appraisal Process Works

Here’s what typically happens during a home appraisal:

1. The Lender Orders the Appraisal

After you sign a purchase agreement or begin the refinance process, your lender will order an appraisal through a third-party appraisal management company (AMC). The buyer usually pays the appraisal fee, which typically ranges from $400–$700, depending on the property and location.

2. The Appraiser Visits the Home

The appraiser will schedule a visit to the home to conduct an in-person evaluation. During the visit, they’ll:

Measure square footage
Assess the layout and number of rooms
Take photos of the interior and exterior
Note any obvious damage or needed repairs
Evaluate updates or renovations

This part of the process typically takes 30–60 minutes for a single-family home.

3. Market Research and Comparable Sales

Once the physical inspection is complete, the appraiser reviews recent sales of similar homes in the area. These “comps” are used to help determine the fair market value of the property.

4. The Final Appraisal Report

The appraiser combines the home visit findings and market data into a detailed report. This report includes:

The estimated value of the home
A list of comparable sales
Notes about the condition of the home
Any adjustments made to account for upgrades or repairs

The lender receives the report and shares it with the buyer. If you’re refinancing, you’ll receive a copy directly.

What Happens If the Appraisal Comes in Low?

If the home appraises for less than the agreed-upon purchase price, it can cause a bump in the road—but it doesn’t necessarily end the deal. You have a few options:

Negotiate with the seller to lower the price to match the appraised value
Pay the difference between the appraised value and the purchase price out of pocket
Challenge the appraisal if you believe there were errors or overlooked comps
Cancel the contract, depending on your contingencies

If you’re refinancing, a low appraisal might reduce the amount you can borrow or affect your loan terms.

Tips for Sellers: How to Help Your Home Appraise Higher

If you're selling your home, a strong appraisal can help support your asking price. Here are a few ways to prep for the appraiser’s visit:

Clean and declutter to help showcase the home’s condition
Make minor repairs (like fixing leaky faucets or chipped paint)
Highlight improvements such as a new roof, HVAC system, or renovated kitchen
Provide a list of upgrades with dates and costs to show added value
Offer comparable sales (especially if you know of relevant homes not yet in the MLS)

While you can’t control the market, these steps can help your home put its best foot forward.

Tips for Buyers: What to Keep in Mind

As a buyer, you can’t choose your appraiser, but you can be prepared:

Review the appraisal report when it comes in and ask questions if anything seems off
Discuss your options with your real estate agent if the value comes in lower than expected
Remember your contingency deadlines in case you need to renegotiate or back out of the deal

Final Thoughts

A home appraisal is a crucial part of the mortgage process. It protects both you and your lender by confirming that the property’s value aligns with the loan amount. While it might seem like just another box to check off, understanding how appraisals work can help you navigate the process with more confidence and fewer surprises.

Whether you're buying your first home or refinancing the one you already love, working with experienced professionals—like your real estate agent and mortgage lender—can help guide you through every step of the appraisal process.