What the appraiser is actually checking
The appraisal is NOT a home inspection. The appraiser's job is to determine the home's fair market value for the lender.
What they do: - Measure the home (square footage, bed/bath count) - Document condition (photos, general observations) - Note major systems (roof, HVAC, foundation) at a surface level - Pull 3+ comparable recent sales within the last 3–6 months - Adjust for differences (extra bathroom, updated kitchen, pool, lot size) - Deliver a value opinion supported by the comps
For FHA/VA/USDA, appraisers also check basic safety and habitability standards (no exposed wires, working heat, no chipping lead paint on pre-1978 homes).
What happens if the appraisal comes in low
Say the home is under contract at $400K but appraises at $385K. Options:
Option 1: Seller reduces price to $385K. Cleanest outcome. Depends on the seller's flexibility and other offers.
Option 2: You cover the gap. You bring an extra $15K to close in addition to your down payment. Your loan-to-value goes up (loan stays at same amount but price drops), which is generally fine.
Option 3: Negotiate a middle ground. Split the $15K — you bring $7,500, seller reduces $7,500.
Option 4: Appraisal rebuttal. If you have better comps the appraiser missed, your lender can submit a reconsideration of value (ROV). Success rate is 10%–20%, but worth trying if the gap is small and your comps are strong.
Option 5: Cancel the contract using your appraisal contingency and get earnest money back.
How to reduce appraisal risk before you offer
1. Ask your agent for the actual sold comps (not list prices) of homes in the last 90 days. If your offer is more than 5% above the highest recent sale, appraisal risk is real.
2. Include an appraisal gap clause in your offer instead of waiving the contingency. Example: 'Buyer will cover up to $10,000 of any appraisal shortfall.'
3. Don't waive the appraisal contingency unless you have cash reserves to cover a $20K–$50K gap.
4. Order the appraisal early. Delays in ordering push closing dates.
Is this path right for you?
Frequently asked questions
Who pays for the appraisal?
The buyer, up front — usually $500–$800 charged during application or at appraisal ordering. Non-refundable regardless of outcome.
How long does an appraisal take?
5–14 days from order to report delivery. In hot markets or rural areas, longer.
Can I choose the appraiser?
No — the lender orders from an Appraisal Management Company (AMC) that randomly assigns a licensed appraiser to avoid conflicts of interest.
Related guides
- The Complete First-Time Homebuyer's Readiness Guide
- How much home you can actually afford
- Pre-approval checklist
- Back to the Knowledge Base
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