When you’re buying or selling a home—or refinancing a mortgage—one crucial step is the home appraisal. It can feel like a mystery to many homeowners, but understanding how it works can make the entire transaction smoother and less stressful. Here’s what you need to know about the home appraisal process.

What Is a Home Appraisal?

A home appraisal is an unbiased estimate of a property’s fair market value conducted by a licensed or certified appraiser. Lenders require an appraisal before approving a mortgage to ensure the loan amount doesn’t exceed the home’s value.

Why Appraisals Matter

Appraisals protect both the lender and the buyer. If a home is appraised for less than the agreed-upon sale price, it can affect financing. Buyers may have to renegotiate the price or cover the difference out-of-pocket.

For sellers, an accurate appraisal supports your listing price and can prevent delays or failed deals.

The Appraisal Process: Step-by-Step

1. Order Is Placed

Once the buyer’s lender initiates the mortgage process, they will order the appraisal through a third-party company.

2. On-Site Inspection

The appraiser visits the property to examine:

Square footage

Number of bedrooms and bathrooms

Condition of the home

Improvements and upgrades

Lot size and location

They may also take photos and notes for their report.

3. Market Research

The appraiser compares the home with comparable sales (or “comps”)—similar properties recently sold in the area—to determine the fair market value.

4. Report Is Completed

The final appraisal report includes:

Property details

Comparable sales analysis

Market conditions

Final appraised value

This report is sent to the lender, and often shared with the buyer.

What If the Appraisal Comes in Low?

If the appraised value is lower than the purchase price, here are a few possible outcomes:

Renegotiate the price with the seller

Challenge the appraisal with supporting data

Make up the difference in cash

Walk away if your contract allows it

How to Prepare for an Appraisal (For Sellers)

To help your home appraise well:

Clean and declutter the space

Make minor repairs (leaky faucets, cracked tiles, etc.)

Highlight recent upgrades or renovations

Provide a list of improvements and receipts

Final Thoughts

Understanding the home appraisal process is essential whether you’re buying, selling, or refinancing. It’s more than just a number—it’s a key part of making informed financial decisions in real estate.

Working with an experienced real estate agent can help you anticipate and navigate appraisal outcomes, ensuring a smoother journey to the closing table.