What is a home appraisal: How it works and what it costs

What is a home appraisal?

A home appraisal is a process through which a licensed, independent professional determines the fair market value of a property. Lenders commonly require an appraisal for a home purchase or refinance, because they show your lender that the amount you're asking to borrow is supported by the market value of the home.

If you need a mortgage to buy a home, your real estate agent will likely suggest an appraisal contingency in the sales contract. This allows a buyer to renegotiate or cancel the purchase if the appraisal does not meet the conditions stated in the contract, like if the appraisal comes in too low to justify the agreed-upon price.

Types of home appraisals

• Traditional (full) appraisal: A licensed appraiser evaluates the home's interior and exterior in person and analyzes comparable sales and market data.
• Hybrid appraisal: Combines a virtual review of the property and market data with an in-person visit from a trained and vetted property-data collector who gathers measurements and details on the appraiser's behalf.
• Desktop appraisal: Done entirely from the appraiser's computer using reliable public records, floor plans, and comps, with no site visit.
• Drive-by appraisal: Also known as an exterior-only appraisal, the appraiser looks only at the outside of the property and uses available property and market data for the rest of the valuation.

How to get a home appraisal

If you're financing a purchase or refinance, you don't need to arrange the appraisal yourself. Your lender orders the appraisal once you're under contract or in underwriting, using a licensed appraiser with no ties to your loan.

If you're paying cash, or want an appraisal outside a loan process, you can hire a state-licensed or certified appraiser directly through a referral from your real estate agent or a professional directory like the Appraisal Institute. Look for an appraiser who’s qualified to look at your property type and familiar with your market for the best results.

How the appraisal process works

Whether you're buying, selling, or refinancing, a home appraisal follows the same basic sequence.

1. Your lender orders the appraisal

If you're financing a purchase or refinancing, your lender selects and orders the appraisal, not you. Fannie Mae bans lenders from using appraisals ordered by the borrower, the seller, or any other party with a financial stake, which keeps interested parties from steering the process. Lenders often hand off the ordering to a third-party appraisal management company, but they stay fully responsible for the appraiser's qualifications and work.

2. The appraiser visits the home

Depending on the appraisal type, this might mean a full interior and exterior walk-through or a review of listing photos and public records. During an in-person visit, the appraiser takes note of a home’s square footage, room count, condition, and any permanent upgrades, and notes anything that could affect the value or relevant property requirements.

3. The appraiser analyzes the home's value

Many residential appraisals rely on the sales comparison approach: comparing the home to recently sold houses nearby, then adjusting for differences in size, condition, and features. For some properties, like new construction, unusual homes, or multi-unit properties, appraisers may also use the cost approach (what it would cost to rebuild) or the income approach (based on rental income potential).

4. The appraiser delivers a report

The appraiser compiles comps, adjustments, and a final opinion of value into a report for the lender, who then passes the report on to the buyer or refinancer at least three days before closing.

What appraisers look for:

• Condition: Age, square footage, room count, and the general upkeep of systems like plumbing, electrical, and roofing. This is an assessment for value, not necessarily a list of immediate or future repairs to watch out for, like a home inspection.
• Improvements: Permanent upgrades and renovations count toward value; anything the owner can take with them when they move won’t be included, like a washing machine.
• Comps: Recent sale prices of similar nearby homes, adjusted for differences in size, condition, and features.

How long does a home appraisal take?

The full appraisal process – from the day your lender orders the appraisal to the day the report is delivered – generally takes anywhere from a few days to a few weeks, but that timeline might run longer in busy markets, for rural or complex properties, or for government-backed loans with stricter documentation requirements.

The in-person portion of the visit itself is usually much shorter, and might take a few hours depending on the home's size and whether the appraiser goes inside the home.

Home appraisal tips for sellers and refinancers

If you already own the home and want to sell it or refinance, some preparation can help the appraisal reflect your home's true value.

Gather your documents. Have on hand documentation of any improvements made over the years, including permits, remodels, and additions. If you've researched comps yourself, you can share them with the appraiser, but just make sure they're genuinely similar in size, location, and condition to your home.

Handle repairs and curb appeal. Take care of obvious issues like broken fixtures, safety hazards, and peeling paint, and tidy up landscaping. A well-maintained property can show it's been cared for, and unresolved safety issues can hold up the appraisal.

Prepare for the day of the visit:

• Provide access to every area – basements, attics, sheds – so the appraiser can complete a full assessment without a follow-up visit.
• Secure pets ahead of time, and let the appraiser know if any will be present.
• You're welcome to be there to answer questions or point out upgrades, but avoid pressuring the appraiser toward a specific number; appraiser independence rules exist for a reason.

How much does a home appraisal cost?

The price of an appraisal can vary based on where you live, the property itself, and the loan type. July 2026 data from Angi lists the average cost of an appraisal at around $300 – $400, but that can rise as high as $1,000 for larger or multiunit properties.

In general, the more work an appraiser has to do, the more it will cost. That means larger homes or properties with unique or luxury features can add to the total, and traditional appraisals can have a heftier price tag than desktop or drive-by appraisals. Loan type also has a large effect on cost, since government-backed loans carry stricter documentation requirements:

Appraisals are usually paid by the buyer as part of closing costs, though this can sometimes be negotiated with the seller.

Some borrowers skip a traditional appraisal entirely: for certain conventional loans with strong loan-to-value ratios, automated underwriting may qualify the loan for an appraisal waiver. Fannie Mae calls this “value acceptance,” and Freddie Mac calls its version “Automated Collateral Evaluation” (ACE). Your lender will let you know if your purchase or refinance qualifies for an appraisal waiver.

What if the appraisal comes back low?

If there’s an appraisal gap that’s lower than your purchase price or expected value, you have a few options:

• Renegotiate the price with the seller based on the appraised value.
• Pay the difference in cash to close at the original price.
• Walk away if you have an appraisal contingency in your contract.
• Request a reconsideration of value (ROV). If you believe an appraisal is inaccurate or based on a factual error, an inappropriate comp, or a missed feature, you can ask for an ROV. A successful ROV typically requires new supporting evidence, such as additional comparable sales, not just disagreeing with the outcome.

If you're refinancing and the appraisal comes in low, a similar reconsideration process applies, though your options for walking away are more limited since you're not tied to a purchase contract.

FAQ

Here are the answers to a few other questions you might have about home appraisals.

Do I need to get a home appraisal?

If you're financing a purchase or refinancing, your lender will typically require an appraisal before you can close. However, some conventional loans with strong loan-to-value ratios, generally up to 90% for primary residences and second homes, that are eligible for automatic underwriting may qualify for an appraisal waiver instead, which is when the underwriting system tells the lender there is enough data available to support the loan amount. If you're buying with cash, an appraisal isn't required, but it's still a good way to confirm you're paying a fair price.

Who pays for the home appraisal?

Unless the home appraisal cost is negotiated with the seller, the buyer typically pays for the appraisal. Factors that can affect the appraisal fee include the home’s location, size, age, condition, and any research the appraiser does on the property.

What if the appraisal comes back higher than expected?

A higher appraisal can reduce the risk of an appraisal gap, but it usually won’t increase how much you can borrow because many lenders base the loan-to-value ratio on the lower of the purchase price or appraised value. If you’re refinancing, a higher value may improve your loan-to-value ratio and expand your loan options, but it won’t automatically remove private mortgage insurance.

The bottom line: Be prepared for your home appraisals

A home appraisal comes down to one question: What is the market value of the home at the time of the deal? Knowing how to get a home appraisal and what happens once it's underway leaves less room for questions, whether you're negotiating a purchase price, prepping your home for sale, or working toward the best refinance terms.

Ready to put that value to work? Start your home loan application with Rocket Mortgage.

¹Refinancing may increase finance charges over the life of the loan.

²Rocket Mortgage is not acting on behalf of FHA or HUD.

³Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. 

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