What Is a Home Appraisal?

A home appraisal is an independent evaluation that determines the current market value of a property. A licensed appraiser reviews the home’s condition, features, and recent sales of similar properties in the area to arrive at a professional opinion of value.

Appraisals typically cost between $300 and $600, depending on factors like the size of the home, property type, and land size. In most cases, the buyer pays for the appraisal, though this can sometimes be negotiated as part of the purchase contract.

Who Conducts the Appraisal?

Home appraisals are completed by licensed, third-party appraisers who are required to remain neutral. They do not work for the buyer, seller, real estate agent, or lender—even if the lender orders the appraisal. Their role is to provide an unbiased assessment based on established guidelines and market data.

What Appraisers Look For

Appraisers evaluate both the property itself and the surrounding market. Here are some of the main factors they consider:

Overall Condition of the Home
The appraiser will walk through the property to assess its general condition. This is not the same as a home inspection. Instead of identifying repair needs, the appraisal focuses on livability, safety, and whether the home meets basic building standards. The appraiser will note the number of bedrooms and bathrooms, functional layout, visible hazards, and overall upkeep.

Permanent Features and Upgrades
Built-in upgrades can positively impact the appraised value. Examples include updated kitchens or bathrooms, upgraded flooring, additional living space, pools, or accessory dwelling units. Cosmetic or temporary improvements usually do not add value—features must be permanent to count.

Comparable Sales (Comps)
Recent sales of similar homes in the area play a major role in determining value. Appraisers compare homes with similar square footage, layouts, age, and features. Market trends can influence these comparisons, so rising or declining home prices may affect the final appraised value.

What If the Appraisal Comes in Low?

If the appraised value is lower than the agreed-upon purchase price, buyers do have options. You may be able to challenge the appraisal by providing stronger comparable sales, renegotiate the price with the seller, bring additional cash to closing, or—if your contract includes an appraisal contingency—walk away from the deal.

Final Thoughts

While buyers have limited control over market conditions, maintaining the home’s condition, completing necessary repairs, and having realistic expectations can help the appraisal process go smoothly. Understanding how appraisals work puts you in a better position to navigate this step with confidence and avoid surprises on the path to closing.