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If you’re selling your home, there’s a good chance you’ll hear the word appraisal shortly after accepting an offer. While it may feel like just another step in the transaction, a home appraisal plays an important role in many home sales, especially when a buyer is financing their purchase with a mortgage.
For many sellers, the appraisal process can feel daunting and mysterious. Who orders it? What does the appraiser actually look at? And what happens if the home appraises for less than the agreed-upon purchase price?
Understanding what happens during a home appraisal can help you prepare your home, set realistic expectations, and navigate the process with confidence. Here’s what every seller should know.
What Is a Home Appraisal?
A home appraisal is an independent evaluation of a home’s current market value conducted by a licensed appraiser. In most financed home purchases, lenders require an appraisal before approving the buyer’s loan to verify that the property’s value aligns with the amount they’re lending.
Although the buyers generally pay for the appraisal as part of their closing costs, the appraiser’s responsibility is to the lender. Their job is to provide an objective opinion of the home’s value by evaluating the property itself and comparing it to similar homes that have recently sold nearby.
When Does the Appraisal Happen?
Once a seller accepts an offer and the purchase agreement is signed, the buyer’s lender will usually order the appraisal early in the transaction. The timing can vary, but it typically occurs within the first few weeks of escrow.
The appraiser will coordinate a time to visit the property. While sellers don’t necessarily need to be present during the appointment, someone will need to provide access to the home. After the inspection, it may take several days for the completed appraisal report to be delivered to the lender.
What Does an Appraiser Look For?
During the visit, the appraiser evaluates both the home’s condition and the features that contribute to its market value. They also consider recent sales of comparable homes in the area, often called “comps”, to help determine how your home compares to similar properties in the current market.
They’ll typically examine:
- Overall size and layout
- Number of bedrooms and bathrooms
- Interior and exterior condition
- Quality of construction finishes
- Major systems such as the roof, HVAC, plumbing, and electrical
- Recent renovations or improvements
- Lost size and usable outdoor space
- Garage, parking, or additional structures
- Energy-efficient features or notable upgrades
The appraiser also takes photographs and measurements of the property to include in the final report. It’s important to remember that an appraisal isn’t the same as a home inspection. While inspectors look for potential defects or maintenance issues, appraisers focus primarily on determining the home’s market value based on its quality and features.
Can Sellers Prepare for an Appraisal?
While sellers can’t control the final valuation, they can take several steps to present the home in its best light.
- Complete small repairs
- Finish ongoing projects
- Improve curb appeal
- Clean and declutter
- Create a list of improvements
What Happens If the Appraisal Comes in Low?
If the appraised value meets or exceeds the purchase price, the transaction typically moves forward as planned. The buyer’s lender now has confirmation that the property’s value supports the loan amount, allowing financing to continue toward closing.
A low appraisal doesn’t automatically mean the sale is over, but it may require additional conversations between the buyer and seller. Some possible outcomes include:
- The buyer covers the difference
- The seller reduces the price
- Both parties negotiate
- The buyer challenges the appraisal
- The transaction doesn’t move forward
While a low appraisal can feel discouraging, an experienced agent can help you understand the results, explain your options, and work with all parties to determine the best path forward.
Whether you’re preparing to sell or simply exploring your options, a Windermere agent can help you understand your home’s value, navigate changing market conditions, and guide you through every step of the selling process.
