Home Appraisals: What You Need to Know Before Buying a Home
A home appraisal can make or break your home purchase. If you're financing your new home, chances are your lender will require one—and the results might surprise you. Here’s everything you need to know about appraisals before signing on the dotted line.
What Is a Home Appraisal?
A home appraisal is an independent professional assessment of a property's market value—a reality check for both buyers and lenders. The process is conducted by a licensed or certified residential appraiser who evaluates the property’s worth based on factors like comparable home sales, the home's condition, location, and amenities.
Lenders rely on appraisals to ensure the home’s purchase price aligns with its true market value—because they don’t want to loan you more than the house is worth. The appraiser doesn’t work for you or the seller. Their only job? To provide a fair and accurate valuation.
? Quick Tip: If your appraisal comes in lower than the agreed-upon purchase price, it can cause financing issues—but don’t panic. You have options! (More on that later.)
Do You Really Need an Appraisal?
If you’re getting a mortgage, then yes—your lender will likely require an appraisal to calculate the loan-to-value (LTV) ratio (the percentage of the home's price you’re borrowing). Most lenders prefer an LTV of 80% or less to minimize their risk.
But if you’re paying cash, an appraisal isn’t required. That said, it can still be a smart move. Nobody wants to overpay for a home, and getting a third-party opinion could save you from making a costly mistake.
? Pro Tip: Some buyers waive the appraisal in a competitive market to make their offer more attractive. Just be sure you’re comfortable with the risk!
What Do Appraisers Look At?
Appraisers take a deep dive into the factors that influence a home's value. This includes:
? Comparable sales ("comps") – Recent sales of similar homes in the same area.
? Property condition – The home's overall shape, maintenance, and any damage.
? Renovations & upgrades – New kitchens, bathrooms, or other improvements can boost value.
? Size & layout – Square footage, number of bedrooms/bathrooms, and functional flow.
? Location – Desirability of the neighborhood, school districts, and access to amenities.
Different appraisers may use different approaches, but one thing is universal: they must be independent, unbiased, and base their findings on hard data.
? Common Mistake: Assuming your upgrades automatically increase your home's value. While renovations can help, their impact on the appraisal might not be as high as you expect.
What Happens If the Appraisal is Lower Than the Purchase Price?
This is where things can get tricky. If the appraisal comes in lower than your agreed purchase price, your lender may not approve the full loan amount, leaving you to make up the difference. Here are your options:
? Negotiate with the seller – Ask them to lower the price to match the appraisal.
? Make up the difference in cash – Pay the shortfall out of pocket.
? Challenge the appraisal – If you believe it was inaccurate, you can request a reconsideration of value (more on that below).
? Walk away – If you included an appraisal contingency in your contract, you can exit the deal without losing your deposit.
? Pro Tip: Including an appraisal gap clause in your offer lets the seller know you're willing to cover a shortfall (up to a set amount), which could give you an edge in competitive markets.
Can You Dispute an Appraisal?
Yes! If you believe an appraiser missed important details or used weak comparable sales, you can request a reconsideration of value (ROV) through your lender.
Here’s how:
1?? Gather evidence – Find better comparables, highlight upgrades, or provide overlooked property data.
2?? Submit your case – I can help craft a compelling argument.
3?? Wait for the decision – The appraiser may adjust the value or stand by their original assessment.
If you suspect bias or misconduct, you can file a complaint with your state's regulatory board or the Appraisal Complaint National Hotline.
? Common Mistake: Not getting your agent involved. As a skilled real estate agent, I can help strengthen your case and advocate for a more fair appraisal.
Will You Receive a Copy of the Appraisal?
Yes! The Federal Equal Credit Opportunity Act requires lenders to automatically send buyers a free copy of their home appraisal. However, if your lender waives the appraisal, they aren’t required to provide a valuation report.
? Pro Tip: Even if you don’t need an appraisal, requesting one can be a great way to ensure you're making a sound investment.
My Final Thoughts: Why This Matters for You
A home appraisal is one of the most critical steps in buying a home. It ensures you (and your lender) aren’t overpaying, and it can have major financial implications for your mortgage. Knowing the process, what to expect, and how to handle any surprises can save you time, stress, and money.
The goal? A fair, unbiased valuation to protect your investment!
Click here for a free, printable Consumer Guide to the Appraisal Process Information Sheet.
And if you're navigating the home buying process and need expert guidance, I’d love to help! Whether you’re buying, selling, or just planning for the future, let’s chat. And if you know someone who could use a little real estate advice, send them my way—I’d be happy to assist!
Source: National Association of Realtors
If you have any questions, want to know what the current value of your home is, would like to book an appointment with me or are looking for some free real estate related educational reports; make sure to Check Out My Link tree
Search for your next dream home or find out the value of your current home on my website www.Realvolutionhomes.com
Dan McDevitt
Cummings & Company Realtors
Team Leader, Realvolution Homes Group
