Understanding the appraisal process

Library | 9/9/2019
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Whether you’re purchasing or refinancing a home, the appraisal process plays an important role in securing your mortgage.


An appraisal is how a lender determines the value of your property and whether a potential loan is viable. From start to finish, understanding the appraisal process can help you get through this phase and on your way to your mortgage approval.

What is a home appraisal? 

A home appraisal is an assessment of the real value of the property organized by your mortgage lender. This is used to determine how much a home is worth in connection with purchasing or refinancing the property. Your mortgage lender wants to make sure their investment is sound before closing on the loan. Appraisals are carried out by impartial third parties so that there is no conflict of interest. The appraiser will determine the home’s value by looking at the condition of the property as well as its location, size, and specific features. These are compared with other homes in the area called “comparables” to establish a value. Once the appraisal has been completed, the lender will verify that the market value is in line with the purchase price and that the lender is comfortable with the loan amount based on these values.

What does an appraiser look for? 

An appraiser isn’t a home inspector, although the two may look for similar items. The appraiser will note the square footage of the home, the number of bedrooms and bathrooms, and other features to compare with other properties in the area. Any improvements will be noted, and they will check for proper permits of work. This process will assess any conditions that might affect the structure or safety of the home, such as termite, mold, or water damage. The appraisal will also assess anything that will impact the resale value of the home, including the condition of the roof, HVAC unit, appliances, plumbing, etc.  

The cost of the appraisal 

The appraiser is a third-party contractor paid by the buyer or loan applicant as part of the estimated costs to closing. The average cost of an appraisal for a single-family home is $450, but this price may differ depending on where you live in the country. Talk to your lender about the appraisal cost when receiving your initial loan estimate. If you are purchasing a larger or more complex property, appraisal costs may increase. Also, if any changes occur to the home while in escrow, the appraiser may need to reassess the property for an additional fee.

Questions about appraisals? Talk to one of our Residential Lending experts to get advice and guidance

Details of the final appraisal report 

The appraiser’s findings will be shared with you in a final report of value. Be sure to review the report and check for consistency with your inspection report. As an added tip, this report can be useful for obtaining your homeowner’s insurance, so ask your lender for an electronic copy to share with your insurance agent. The report of value will include the following items:

  • Comments about the overall condition of the house

  • A description of any structural issues

  • A description of permanent fixtures, such as plumbing, lighting, and ceiling fans

  • Information regarding home repairs or renovations, such as new bathrooms or kitchens

  • Remarks about the area surrounding the home

  • Depictions of the home, including photographs or maps

  • A market analysis which includes information about comparable properties


If you disagree with any aspects of the report, talk to your real estate agent and your lender about your concerns. The appraisal value can make or break the mortgage, so make sure everyone is on the same page and comfortable with the findings.

A lot goes on behind the scenes of a home purchase or refinance. For most homeowners the appraisal process will be hands-off and straightforward. But when issues arise its important to understand the process and your options to get your mortgage back on track. If you have any questions about the appraisal process, or any part of the mortgage journey, talk to your lender today.

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