Home Appraisals: A Buyer’s Guide

If you’re financing a home purchase, your lender will likely require an appraisal before closing. Here’s what you need to know:

What is a Home Appraisal?

A home appraisal is an independent assessment of a property’s market value by a licensed or certified appraiser.

Lenders require appraisals to ensure the purchase price aligns with the home’s actual value. Appraisers are neutral third parties who provide objective evaluations without representing buyers or sellers.

Is an Appraisal Required?

If you’re using a mortgage, your lender will typically require an appraisal to determine the loan-to-value (LTV) ratio – the percentage of the home’s value you’re borrowing.

Cash buyers don’t need appraisals.

What Factors Influence an Appraisal?

Appraisers evaluate multiple factors to determine a home’s value. They analyze comparable properties in the MLS with similar characteristics that recently sold.

They assess the home’s condition, location, size, renovations, amenities, and market trends.

What Happens if the Appraised Value Differs from the Purchase Price?

If the appraisal comes in below the agreed purchase price, it may affect your lender’s financing terms.

Buyers can renegotiate or withdraw from the transaction if the appraisal value falls short of the purchase price.