Appraisal
An appraisal is an independent, professional evaluation of a property's market value, conducted by a licensed appraiser and required by the lender before a mortgage can be finalized.
The appraiser inspects the property, evaluates comparable recent sales in the area, and produces a written report estimating value. The lender uses this report to confirm the home supports the loan amount being requested.
An appraisal is not a home inspection. It does not evaluate the condition of systems like plumbing, electrical, or HVAC. Its purpose is to determine value for the lender — not to identify repairs for the buyer. Learn about the difference between inspections and appraisals.
Why This Matters: If the appraisal comes in lower than the purchase price, the loan terms may need to be adjusted. Understanding the appraisal process prepares you for one of the most important checkpoints in any real estate transaction. See our guide on what happens if your home appraises low.
Common question
Who orders the appraisal?
The lender orders the appraisal to confirm the property value supports the loan amount. The borrower typically pays for it as part of closing costs.
Is an appraisal the same as a home inspection?
No. The appraisal determines value for the lender. A home inspection evaluates the physical condition of the property for the buyer. Both can be important.
Related Mortgage Terms
Have questions about how the appraisal process works? We will explain what to expect — and what to do if it comes in low.
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