You agreed on a price with the seller, your loan is moving forward, and then your lender says one more thing has to happen before closing. An appraisal.
A home appraisal is an independent, professional estimate of what a home is actually worth, and your lender requires it to make sure they are not loaning you more money than the house is worth on paper. If the appraisal comes in at or above your purchase price, the process moves forward as planned. If it comes in lower, you and the seller have some decisions to make.
Who Orders the Appraisal and Why
Your lender orders the appraisal, not you and not the seller, even though as the buyer you typically pay for it. This is intentional. The appraiser has no relationship with either party and no stake in whether the deal closes.
Their job is simply to protect the lender by confirming the home is worth roughly what you are borrowing against it.
What the Appraiser Actually Looks At
A licensed appraiser visits the home in person, walks through it, measures square footage, and takes note of its condition, age, layout, and any updates or deferred maintenance. They then compare it to similar homes that have recently sold nearby, often called comparable sales or comps.
Location, lot size, finished basement space, garage stalls, and recent renovations all factor into the final number.
What Happens When the Appraisal Matches or Exceeds the Price
This is the outcome everyone hopes for. When the appraised value comes in at or above your agreed purchase price, your loan moves forward without changes needed.
This confirms to your lender that the collateral behind your mortgage supports the loan amount, and it is one less thing to worry about before closing.
What Happens When the Appraisal Comes in Low
If the appraisal comes in below your purchase price, you have a gap to deal with. Your lender will only loan based on the appraised value, not the higher purchase price, which means you would need to cover the difference in cash, renegotiate the price with the seller, challenge the appraisal, or in some cases walk away if you have an appraisal contingency in your purchase agreement.
Which option makes sense depends on how large the gap is and how much you want the home.
Why the Appraisal Protects You Too
It is easy to think of the appraisal as a hurdle, but it also protects you as the buyer. If a home is genuinely overpriced compared to what similar homes have sold for, the appraisal is one of the few checks in the process designed to catch that before you are locked into paying more than the home is likely worth.
How to Prepare for a Smooth Appraisal
There is not much you can control directly since the appraiser works for the lender, but you can help by making sure the home is accessible on the scheduled day and by working with an agent who provides the appraiser with a list of recent comparable sales and any relevant upgrades the seller has made.
This kind of context can support a fair valuation.
Frequently Asked Questions
Q: How soon after my offer is accepted does the appraisal happen?
A: It typically happens a few weeks into the process, once your loan is far enough along that your lender is ready to order it, and often after the home inspection.
Q: Who pays for the appraisal?
A: The buyer typically pays for the appraisal as part of closing costs or upfront fees, even though the lender is the one who orders it.
Q: Can I be present during the appraisal?
A: It is not required, but some buyers choose to be there. Your agent can advise on whether that makes sense for your situation.
Q: What if I disagree with the appraised value?
A: You can request a reconsideration of value from your lender, which involves submitting additional comparable sales data for the appraiser to review, though there is no guarantee the value will change.
Q: Does a low appraisal always kill the deal?
A: No. Many low appraisals get resolved through renegotiation with the seller, a buyer covering part of the gap in cash, or a combination of both.
Q: Is an appraisal the same as a home inspection?
A: No. An appraisal focuses on value for the lender, while an inspection focuses on the physical condition of the home for your own knowledge. They serve different purposes and are usually done separately.
Closing Call to Action
If you want to understand how appraisals have been playing out in the neighborhoods you are considering, or you are heading into an offer and want to think through appraisal gap strategy ahead of time, reach out to me and we can talk through it before you are in the middle of a transaction.