A home appraisal is an independent, professional estimate of a property's market value. Lenders require appraisals to ensure the home is worth at least the loan amount — protecting them from lending more than the collateral is worth. The appraiser is a licensed, third-party professional selected by the lender (not you or your agent). You typically pay for the appraisal ($400-$800) as part of closing costs.
Recent sales of similar homes within 0.5-1 mile, typically within the last 6 months. Comps are adjusted for differences in square footage, bedrooms, bathrooms, condition, and features.
Square footage, number of rooms, lot size, age, condition, neighborhood, view, and functional layout. Major differences from comps affect value.
Overall condition rating (C1-C6). Renovations, updates, wear and tear. Structural integrity. Health and safety items (FHA/VA have stricter minimums).
Location within neighborhood, proximity to amenities, busy roads, schools, zoning. These affect marketability.
| Type | Description | Typical Cost |
|---|---|---|
| Full Appraisal | On-site interior/exterior inspection, detailed report with comps. Standard for most purchases. | $400-$700 |
| Drive-By / Exterior-Only | Appraiser views exterior only, uses public records for interior. May be allowed for refinances. | $250-$400 |
| Desktop Appraisal | No physical visit. Uses public records, MLS data, and property details. Eligible for some refinances. | $150-$300 |
| FHA Appraisal | Full appraisal + HUD minimum property standards check. Stricter — safety, security, soundness. | $450-$750 |
| VA Appraisal | VA-certified appraiser. VA Minimum Property Requirements (MPRs). Tidewater process for low values. | $450-$800 |
1. Dispute the appraisal. Provide better comps the appraiser may have missed, point out errors in square footage/room count, or highlight recent improvements. Success rate: modest, but worth trying.
2. Renegotiate the price. Ask the seller to lower the price to the appraised value. In a buyer's market, this often works. In a seller's market, they may refuse.
3. Cover the gap with cash. If the home appraises at $280,000 but you offered $300,000, you bring the $20,000 difference as additional down payment.
4. Request a second appraisal. The lender may order a new appraisal from a different appraiser. Not guaranteed and you'll pay for both.
5. Walk away. If you have an appraisal contingency, you can cancel the contract and get your earnest money back.