Appraisal
A licensed appraiser's opinion of the home's market value. Lenders order it to make sure the home is worth at least what they're lending on. Buyer usually pays for it.
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Free to set up. No credit card.Part 1 of 4
Why a seller cares
The buyer's lender orders it, and if it comes in under the contract price the loan may not cover the gap. A low appraisal is the most common surprise in a financed sale, and it has known ways forward.
Part 2 of 4
A simple example
Contract price $310,000, appraisal $300,000. The lender will lend against $300,000. The buyer brings the difference, the price is reduced, the two meet in the middle, or the deal ends under the appraisal contingency.
| What the appraisal says | What usually follows |
|---|---|
| $310,000 or more | Nothing; the loan proceeds at the contract price |
| $300,000, and the buyer has cash | They bring the $10,000 or the two sides split it |
| $300,000, and the buyer has no cash | A price cut to $300,000, or the buyer walks under their contingency |
The appraisal sets the ceiling on the loan, not on the price. The gap is what the two sides negotiate.
Part 3 of 4
What people get wrong
That the appraiser decides what your home is worth. They decide what the lender will lend on; a buyer can pay more.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · read against CFPB: what is a home appraisal? · how we research and check what we publish
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