# What Is a Home Appraisal? How It Works, What It Costs, and What to Expect By Opendoor Editorial Team | 2026-06-09 # What Is a Home Appraisal? How It Works, What It Costs, and What to Expect A home appraisal is a professional, unbiased assessment of a property's fair market value conducted by a state-licensed or certified appraiser. If you're buying a home, refinancing your mortgage, or preparing to sell, understanding what is a home appraisal — and why it matters — is one of the most important steps in navigating a real estate transaction with confidence. In plain terms, fair market value is the price a knowledgeable buyer would willingly pay and a knowledgeable seller would willingly accept, assuming neither is under pressure to act. The appraisal exists primarily to protect the lender: since the home serves as collateral for the mortgage, the lender needs assurance that it isn't issuing a loan for more than the property is actually worth. It also protects you as a buyer from overpaying in a competitive market. Appraisals are required in several situations — [purchase mortgages](https://www.opendoor.com/articles/what-is-a-mortgage-and-how-does-it-work), refinances, home equity lines of credit (HELOCs), and sometimes when requesting the removal of private mortgage insurance (PMI). If a lender is involved, an appraisal is almost always part of the process. One common point of confusion: **a home appraisal is not the same as a home inspection.** An appraisal determines the property's market value — it answers the question, "How much is this home worth?" A [home inspection](https://www.opendoor.com/articles/appraisal-vs-home-inspection-whats-the-difference), on the other hand, evaluates the property's physical condition and identifies defects, safety hazards, and needed repairs. Both involve a professional visiting the home, but they serve fundamentally different purposes. ## How Does a Home Appraisal Work? The appraisal process follows a structured sequence, from the moment it's ordered to the final report landing on the lender's desk. Here's how each step unfolds. ### Who Orders the Appraisal? The mortgage lender orders the appraisal — not the buyer, seller, or real estate agent. This happens after a purchase agreement is signed or after you submit a refinance application. Post-2009 regulations, including the Home Valuation Code of Conduct and provisions of the Dodd-Frank Act, require strict independence between lenders and appraisers. That means you as a borrower cannot choose, contact, or influence the appraiser assigned to your transaction. In practice, the lender selects the appraiser through an Appraisal Management Company (AMC), which acts as an independent intermediary. The AMC assigns a local, licensed appraiser who has no relationship with any party in the deal. While the lender orders it, you — the borrower — pay for it as part of your [closing costs](https://www.opendoor.com/articles/how-much-does-it-cost-to-buy-a-house). ### The Step-by-Step Appraisal Process **Step 1 — Assignment.** The lender engages an AMC, which assigns a licensed appraiser familiar with the local market. **Step 2 — Property visit.** The appraiser schedules and conducts an on-site inspection of the home's interior and exterior. For a modest-sized single-family home, the visit typically takes approximately 30–60 minutes. Larger or more complex properties may require [several hours](https://www.bankrate.com/mortgages/home-appraisals/). **Step 3 — Comparable sales research.** The appraiser identifies three to six recent comparable sales — known as "comps" — typically properties within one mile that sold within the last 90 days. They then make adjustments for differences in square footage, condition, features, lot size, and upgrades. **Step 4 — Report completion.** The appraiser compiles all findings into a Uniform Residential Appraisal Report (URAR / Fannie Mae Form 1004). This report is delivered to the lender, usually within one to two weeks of the property visit. **Step 5 — Lender review.** The lender reviews the appraisal report and factors the appraised value into its underwriting decision. If the value supports the loan amount, the process moves forward. If it doesn't, additional steps may be needed. ### Types of Home Appraisals Not every appraisal requires an appraiser walking through your living room. There are several types, and the lender determines which one is appropriate based on the loan type and risk profile. - **Full appraisal (traditional):** An in-person interior and exterior inspection — the most common type for purchase loans. The appraiser walks through the home, takes photos, measures rooms, and examines the property's condition firsthand. - **Drive-by / exterior-only appraisal:** The appraiser evaluates the property from the outside and supplements with public records and MLS data. This is common for certain refinances where the lender has confidence in existing property data. - **Desktop appraisal:** Entirely remote — the appraiser uses public records, MLS photos, tax data, and comparable sales without ever visiting the property. Desktop appraisals gained significant traction after 2020, and Fannie Mae and Freddie Mac now allow them for [certain low-risk transactions](https://www.nerdwallet.com/mortgages/learn/home-appraisal). - **Hybrid appraisal:** A third party (not the appraiser) physically inspects the property and sends data, photos, and measurements to the appraiser, who completes the analysis remotely. ## What Do Appraisers Look For? Appraisers evaluate dozens of factors to arrive at a single number. Understanding [what appraisers actually look for](https://www.opendoor.com/articles/items-that-increase-your-home-appraisal-value-what-appraisers-actually-look-for) can help you anticipate the outcome — whether you're buying, selling, or refinancing. ### Interior Factors - **Total living area and layout:** Square footage, bedroom and bathroom count, and the overall floor plan. Open layouts and functional flow are noted. - **Condition and quality of finishes:** Flooring, countertops, cabinetry, fixtures, and general upkeep. A recently remodeled kitchen or bathroom can positively affect value. - **Updates and renovations:** Appraisers note additions, finished basements, and major upgrades. They also document whether work was done with or without permits — unpermitted improvements may receive reduced or no value credit. - **Functional systems:** The age and condition of HVAC, plumbing, electrical, and the water heater. Outdated or failing systems signal deferred maintenance. - **Health and safety concerns:** Evidence of mold, water damage, lead paint, or faulty wiring can lower the appraised value and, in the case of [FHA loans](https://www.opendoor.com/articles/what-is-an-fha-loan-and-how-does-it-work), may need to be remediated before the loan closes. ### Exterior and Structural Factors - **Foundation integrity:** Cracks, settling, or evidence of structural movement. - **Roof age and condition:** A [newer roof](https://www.opendoor.com/articles/does-a-new-roof-increase-home-value-roi-costs-and-what-sellers-need-to-know) in good condition is a positive; a roof nearing end-of-life is a red flag. - **Siding, windows, and drainage:** Overall exterior envelope and how well the property sheds water. - **Lot size and features:** Garage or carport, driveway, outbuildings, [landscaping](https://www.opendoor.com/articles/does-landscaping-increase-home-value), fencing, and whether the property includes a [pool](https://www.opendoor.com/articles/does-a-pool-add-value-to-your-home-what-the-data-actually-shows). - **Curb appeal:** While appraisers are trained to look past cosmetics, first impressions can influence subjective adjustments in the report. ### Location and Market Factors - **Neighborhood quality:** [School ratings](https://www.opendoor.com/articles/how-school-ratings-impact-home-prices), proximity to amenities, crime data, and general desirability. - **Comparable sales:** Recent sales of similar homes in the immediate area are the single biggest driver of the appraised value. The appraiser's job is essentially to prove, through data, what the market says your home is worth. - **Zoning and environmental factors:** Flood zone status, environmental hazards, easements, and zoning restrictions are documented. - **Market trends:** Is the local market appreciating, stable, or declining? The appraiser notes the direction and pace of price changes in the neighborhood. ## How Much Does a Home Appraisal Cost? For a standard single-family home, you can expect to pay between **$300 and $500** for a professional appraisal. [Bankrate cites a range of $314–$424](https://www.bankrate.com/mortgages/home-appraisals/) based on 2026 data from Angi. [Rocket Mortgage reports an average of approximately $343](https://www.rocketmortgage.com/learn/home-appraisal), with costs ranging from $300 to $1,000 depending on complexity. [NerdWallet cites a national average of $358](https://www.nerdwallet.com/mortgages/learn/home-appraisal) and notes that metropolitan areas may charge $600 or more. Several factors influence the final cost: - **Geographic location:** Appraisals in high-cost metro areas tend to be more expensive than in suburban or rural markets. - **Property size and type:** A single-family home costs less to appraise than a multi-unit property, which requires evaluating each unit individually. - **Complexity:** Acreage, unique construction, limited comparable sales, or historical designation can all increase the fee. - **Loan type:** FHA and VA appraisals may cost slightly more due to additional property condition requirements mandated by those programs. **Who pays?** The buyer or borrower pays for the appraisal. In a purchase transaction, the fee is part of your [closing costs](https://www.opendoor.com/articles/mortgage-closing-costs). In a refinance, the homeowner pays. The lender orders the appraisal, but the borrower bears the cost. While the seller does not typically pay, a seller may occasionally agree to cover the appraisal fee during negotiations. One important note: the appraisal fee is **non-refundable**, even if the deal falls through. | Appraisal Type | Typical Cost Range | Notes | | --- | --- | --- | | Standard single-family home | $300–$500 | Most common; covers interior and exterior | | FHA appraisal | $400–$600 | Additional property condition requirements | | Multi-unit (2–4 units) | $500–$800 | Each unit must be evaluated | | Large / rural / complex property | $600–$1,000+ | Acreage, unique construction, limited comps | | Desktop or drive-by appraisal | $150–$350 | Lower cost; limited scope | *Sources: \[Bankrate\](https://www.bankrate.com/mortgages/home-appraisals/), \[NerdWallet\](https://www.nerdwallet.com/mortgages/learn/home-appraisal), \[Rocket Mortgage\](https://www.rocketmortgage.com/learn/home-appraisal)* ## How Long Does a Home Appraisal Take? The [timeline for a home appraisal](https://www.opendoor.com/articles/how-long-does-an-appraisal-take) breaks down into two phases: the property visit and the report completion. - **On-site visit:** 30 minutes to several hours, depending on the size and complexity of the home. - **Report turnaround:** Typically 3–10 business days after the visit. The national average is approximately seven days, though high-demand markets or rural areas with fewer licensed appraisers may experience longer waits. - **Total timeline from ordering to receiving the report:** Generally one to three weeks. Seasonal spikes during the spring and summer buying season can extend wait times further. Appraisal delays are one of the most common causes of [closing delays](https://www.opendoor.com/articles/how-long-does-closing-take). Ask your lender for the expected timeline upfront and build that buffer into your closing schedule. If you're in a time-sensitive situation, discuss with your lender whether a desktop or hybrid appraisal might be an option for your loan type. ## Appraisal vs. Home Inspection vs. Online Valuation: What's the Difference? These three terms get used interchangeably, but they serve very different purposes. Understanding the distinction helps you know what you're paying for — and what you're not. ### Appraisal vs. Home Inspection An appraisal determines market value. A [home inspection](https://www.opendoor.com/articles/briefs/what-do-home-inspectors-look-for) identifies physical defects and safety issues. They overlap in that both involve a professional visiting the property, but the outcomes are entirely different. The appraiser works in the lender's interest — their job is to confirm the home is worth the loan amount. The inspector works for the buyer — their job is to uncover problems you might not see. Appraisals are required by lenders. Inspections are optional but strongly recommended, especially for [first-time buyers](https://www.opendoor.com/articles/open-house-tips-for-first-time-buyers). ### Appraisal vs. Online Home Value Estimate (AVM) Online tools like Zillow's Zestimate, Redfin Estimate, and Opendoor's home value estimator use automated valuation models (AVMs). These algorithms analyze public records, recent sales data, and statistical models to produce instant estimates. AVMs provide a useful starting point, but they are **not a substitute for a professional appraisal.** They cannot account for interior condition, recent renovations, or the hyper-local nuances a licensed appraiser captures in person. Accuracy varies: for on-market homes, these tools typically have median error rates of roughly 2–3%, but accuracy drops significantly for off-market properties where less current data is available. Homeowners looking for a quick sense of [what their home is worth](https://www.opendoor.com/articles/how-much-is-my-house-worth-7-ways-to-find-out-your-homes-value) can start with an online valuation tool that combines market data with local pricing expertise. However, if you're buying or refinancing, a lender-ordered appraisal remains the industry standard. | Feature | Professional Appraisal | Online Home Value Estimate (AVM) | Home Inspection | | --- | --- | --- | --- | | Purpose | Determine market value for lending | Provide quick value estimate | Identify defects and safety issues | | Conducted by | Licensed/certified appraiser | Algorithm + public data | Licensed home inspector | | Includes property visit | Yes (full appraisal) | No | Yes | | Required by lender | Yes | No | No (but recommended) | | Typical cost | $300–$500+ | Free | $300–$500 | | Accuracy | Highest (human + data) | Moderate (±2–7% typical) | N/A (not a valuation) | ## What Happens If the Appraisal Comes In Low? A "low appraisal" means the appraised value comes in below the agreed-upon purchase price — or below the amount needed for a refinance. This is more common than many buyers expect, particularly in competitive markets where bidding wars push prices above what comparable sales support. **Why it matters:** The lender will only issue a loan based on the appraised value, not the contract price. If you agreed to pay $400,000 but the appraisal comes in at $380,000, the $20,000 gap becomes your problem. Here's how to handle it. **Options for buyers:** - **Negotiate a lower price.** Ask the seller to reduce the purchase price to match the appraised value. Many sellers will negotiate rather than risk losing the deal. - **Pay the difference out of pocket.** Increase your down payment to cover the gap between the appraised value and the contract price. This requires additional cash at closing. - **Request a reconsideration of value (ROV).** If you believe the appraiser missed relevant comparable sales or made factual errors, you can provide additional comps through your lender. The lender submits the ROV to the appraiser for review. - **Walk away.** If your contract includes an [appraisal contingency](https://www.opendoor.com/articles/under-contract-meaning), you can back out and [recover your earnest money deposit](https://www.bankrate.com/mortgages/home-appraisals/). - **Order a second appraisal.** This is possible in some cases, though the lender must approve it and you'll pay for another appraisal out of pocket. **Options for sellers:** - Lower the price to the appraised value to keep the transaction on track. - Provide the appraiser (through the lender) with documentation of improvements or overlooked comps that support a higher value. - Reject the buyer's request and hope the buyer covers the gap — or wait for a new buyer, potentially one making a [cash offer](https://www.opendoor.com/articles/what-is-a-cash-offer-in-real-estate-and-why-consider-it) that doesn't require an appraisal. **For refinancing homeowners:** A low appraisal may reduce the amount you can borrow or eliminate your ability to refinance altogether. Consider waiting for market appreciation or making [strategic improvements](https://www.opendoor.com/articles/how-to-increase-home-value) before reapplying. ## How to Prepare for a Home Appraisal You can't control the appraised value, but you can make sure the appraiser sees your home at its best. These [preparation steps](https://www.opendoor.com/articles/home-appraisal-tips-and-what-is-home-appraisal-based-on) help ensure nothing is overlooked. - **Clean and declutter.** While appraisers evaluate structure and features over tidiness, a clean home allows them to see spaces clearly and signals good maintenance. Think of it less like [staging](https://www.opendoor.com/articles/home-staging-what-it-is-and-how-to-know-if-its-right-for-you) and more like clearing the path. - **Complete minor repairs.** Fix leaky faucets, patch drywall holes, replace broken fixtures, and address peeling paint. Visible deferred maintenance can lower the appraiser's condition rating. - **Document improvements.** Create a list of all renovations, upgrades, and their approximate costs. Include permit records if available. Appraisers are not obligated to ask what you've done to the home, so having this information ready ensures nothing goes unnoticed. - **Ensure access to all areas.** Unlock gates, clear paths to the attic, basement, crawl space, and utility areas. If the appraiser can't access a space, they may note it as a limitation in the report. - **Boost curb appeal.** Mow the lawn, trim hedges, and clean the exterior. The appraiser's assessment begins the moment they pull up to the curb. - **Provide your own comps (optional).** If you or your agent have identified favorable comparable sales the appraiser might miss, leave a printed summary. The appraiser isn't required to use them, but additional context can be helpful — especially in areas with limited recent sales. ## What Not to Say to a Home Appraiser Appraiser independence is legally protected. Attempting to influence the outcome — even unintentionally — can backfire. Here's what to avoid during the visit. - **Don't tell the appraiser what value you "need."** Saying "we need it to appraise at $450,000" puts pressure on the appraiser and may be reported as attempted influence. Let the data speak for itself. - **Don't disparage the neighborhood or nearby properties.** Offhand comments like "the house next door sold for way too little" can inadvertently introduce negative information the appraiser wouldn't have considered. - **Don't follow the appraiser room-to-room offering commentary.** Be available to answer questions — "When was the roof replaced?" or "Is the basement finished?" — but avoid hovering. Appraisers need space to do their work objectively. - **Don't exaggerate or misrepresent improvements.** If your kitchen remodel cost $15,000, don't claim it was $40,000. Appraisers are trained professionals who can distinguish a cosmetic refresh from a full renovation. - **Don't argue with the appraiser on-site.** If you disagree with the final value, the proper channel is a reconsideration of value (ROV) submitted through your lender after the report is complete — not a debate during the inspection. **What you should do:** Be polite, have your list of improvements ready, answer factual questions honestly, and then step back. The most productive thing you can say is: "I have a summary of recent updates if that would be helpful. Let me know if you have any questions." ## Top Questions People Ask About Home Appraisals ### How accurate are free online appraisals? Free online home value estimates, also known as automated valuation models (AVMs), provide a useful directional estimate but are not as accurate as a professional appraisal. These tools rely on public records, tax data, and recent sales algorithms — they cannot see the interior of your home, assess its condition, or account for renovations. For on-market homes with strong recent comparable data, median error rates typically range from about 2% to 3%. For off-market homes, that error can widen to 7% or more. If you need a valuation for a mortgage, a lender-ordered professional appraisal is the required standard. Online estimates are best used as a [starting point to understand your home's value](https://www.opendoor.com/articles/whats-your-home-worth-take-these-steps-to-find-out), not a final answer. ### What is the difference between an appraisal and a valuation? In everyday conversation, people use "appraisal" and "valuation" interchangeably, but they mean different things in real estate. A **home appraisal** is a formal assessment conducted by a state-licensed or certified appraiser, resulting in a written report used by lenders to make lending decisions. A **valuation** is a broader term that can refer to any method of estimating a property's worth — including online AVMs, comparative market analyses (CMAs) prepared by real estate agents, or even a homeowner's own research. Appraisals carry legal weight in mortgage transactions; other valuations typically do not. Learn more about the nuances in our guide to [fair market value](https://www.opendoor.com/articles/fair-market-value-of-a-home-what-it-means-and-how-to-find-it). ### What is the total appraisal cost? The total cost of a home appraisal typically ranges from [$300 to $500 for a standard single-family home](https://www.nerdwallet.com/mortgages/learn/home-appraisal). The national average is approximately $358, though prices vary based on location, property size, and complexity. FHA appraisals tend to cost $400–$600 due to additional inspection requirements. Multi-unit properties (two to four units) generally run $500–$800. Large, rural, or architecturally complex homes can exceed $1,000. Desktop or drive-by appraisals, which involve no interior inspection, are less expensive at $150–$350. ### What not to say to a home appraiser? Never tell the appraiser what value you need the home to appraise at, and never attempt to pressure or incentivize them toward a specific number. Avoid exaggerating the cost of improvements, disparaging neighboring properties, or arguing about methodology during the visit. These actions can be perceived as attempting to influence the appraisal, which violates federal regulations designed to protect appraiser independence. Instead, provide factual documentation of upgrades, answer questions honestly, and let the appraiser work without interference. ### Can an appraisal be done online? Yes, but only in certain circumstances. **Desktop appraisals** are conducted entirely remotely — the appraiser uses public records, MLS listings, tax data, and comparable sales without visiting the property. Fannie Mae and Freddie Mac now permit desktop appraisals for [specific low-risk transactions](https://www.nerdwallet.com/mortgages/learn/home-appraisal), particularly certain refinances. However, for most purchase loans, a full in-person appraisal is still required. The lender — not the borrower — decides which appraisal type is appropriate for the transaction. ### Who pays for the home appraisal? The buyer or borrower pays for the appraisal. In a home purchase, the [appraisal fee is included in closing costs](https://www.bankrate.com/mortgages/home-appraisals/). In a refinance, the homeowner pays. While the lender orders the appraisal and selects the appraiser (through an AMC), the financial responsibility falls on the borrower. The fee is non-refundable — even if the transaction doesn't close. ### How reliable are online property estimates compared to professional appraisals? Online estimates are a helpful starting point but are meaningfully less reliable than professional appraisals. AVMs use algorithms and historical data, which means they can't account for a home's current interior condition, the quality of renovations, or hyper-local factors like a view, traffic noise, or proximity to a new development. A licensed appraiser physically inspects the property, selects the most relevant comps, and applies professional judgment. For any situation involving a lender — buying, refinancing, or taking out a HELOC — the professional appraisal is the only valuation the lender will accept. ### What happens after the appraisal is done? After the on-site visit, the appraiser completes a written report — typically the Uniform Residential Appraisal Report (Form 1004) — and delivers it to the lender within [one to two weeks](https://www.bankrate.com/mortgages/home-appraisals/). The lender reviews the report as part of underwriting. If the appraised value meets or exceeds the purchase price (or the amount needed for a refinance), the loan moves forward. If it comes in low, the lender, buyer, and seller will need to negotiate next steps. As a borrower, you're entitled to receive a copy of the appraisal report, typically at least three days before closing. ### How long after an appraisal is ordered does it happen? Once the lender orders the appraisal, the on-site visit is typically scheduled within one to two weeks, depending on appraiser availability in your area. The entire process — from ordering to receiving the final report — generally takes one to three weeks. In high-demand seasons or areas with a shortage of licensed appraisers, it can take longer. This is one of the most common reasons for [delays in closing](https://www.opendoor.com/articles/how-long-does-it-take-to-buy-a-house), so build the timeline into your expectations early. **Frequently asked questions** --- *Originally published at [https://www.opendoor.com/articles/what-is-a-home-appraisal](https://www.opendoor.com/articles/what-is-a-home-appraisal)*