Home Appraisal Basics
Posted on September 11, 2026 at 2:19 PM
A home appraisal is an important part of the home financing process. It provides an objective estimate of a property's value and may be required when purchasing a home, refinancing a mortgage, or obtaining a home equity loan or line of credit. Whether an appraisal is required depends on the lender and underwriting requirements.
What is a Home Appraisal?
A home appraisal is completed by a licensed or certified, independent third-party appraiser. The appraiser evaluates the property and provides an unbiased opinion of its market value, helping ensure that the buyer, seller and lender have an accurate understanding of what the property is worth.
Why Is an Appraisal Important?
For homebuyers, an appraisal can help confirm that the home's value supports the purchase price. If the appraised value comes in significantly below the agreed-upon price, it could affect financing or provide an opportunity to renegotiate the purchase depending on the terms of the contract.
An appraisal also helps protect the lender by determining whether the property's value adequately supports the amount being financed.
What Happens During an Appraisal?
For a home purchase, the appraisal typically takes place after the seller accepts an offer and before closing. The lender generally schedules the appraisal.
During the process, an appraiser may:
- Visually inspect the property's interior and exterior
- Review the surrounding neighborhood
- Research comparable recently sold properties
- Review relevant public and private property data
- Evaluate the home's condition and improvements
- Prepare a report detailing the property's estimated value
Appraisal vs. Home Inspection
An appraisal and a home inspection serve different purposes. An appraisal determines a property's value, while a home inspection focuses on its physical condition and potential problems. Although an appraiser may note visible defects, they are not responsible for identifying hidden issues such as plumbing, electrical or pest problems.
What's Included in an Appraisal Report?
A residential appraisal report typically includes information about the property and neighborhood, market trends, property condition and improvements, comparable sales and the appraiser's final opinion of the property's market value. The lender uses this information as part of the loan decision process.
Categories: Lending
