Home Appraisal Cost: Who Pays, What Affects It and Low Values

We may earn commission from links on this page. Lead-form submissions are forwarded to local inspector partners. How we research and review.

An appraisal is one of the few closing costs most buyers cannot avoid when they finance a home, and it is often one of the first ones they pay. The home appraisal cost itself is modest compared with the purchase price, but the result can reshape a deal: a value that comes in below the contract price can force a renegotiation, a bigger down payment or a cancelled sale. This guide covers what drives the fee, who pays and when, how an appraisal differs from a home inspection, how FHA and VA appraisals work, your right to a copy of the report, and what buyers can do after a low appraisal. It is general consumer information, not legal or financial advice; fees and requirements vary by lender, loan type and location, so confirm specifics with your lender or a real estate attorney.

Part of our Home Inspections Explained guide — start there for the full picture →

How Much a Home Appraisal Costs

There is no single national price. For a typical single-family home with a conventional loan, the fee is commonly a few hundred dollars, and it can run higher for larger homes, rural or mountain properties, multi-unit buildings, unusual or custom houses, and rush orders. The exact figure for your loan appears on your Loan Estimate, usually among the services you cannot shop for, and again on the Closing Disclosure. If you want a number before applying, ask the lender directly what they expect to charge for your property type and area.

Several factors push the fee up or down:

• Size and complexity. More square footage, outbuildings, acreage, accessory dwelling units or a mix of finished and unfinished space all take more time to measure and analyze.
• Location. Fees reflect local appraiser supply and demand, travel time, and how easy it is to find comparable sales. Foothills and rural properties along the Front Range may need longer drives and wider searches for comparables than a tract home in Aurora or Highlands Ranch.
• Loan type. Government-backed loans carry extra property standards the appraiser must check, and the reporting forms can differ from a conventional appraisal.
• Property type. Two- to four-unit properties typically require additional rental analysis. Condos may involve review of the project as well as the unit.
• Turnaround time. In busy markets, rush fees or longer wait times are common.
• Follow-up visits. If the appraisal is made “subject to” repairs, a re-inspection to confirm completion often carries its own fee.

Many lenders order appraisals through an appraisal management company, which assigns an independent appraiser and handles communication. That arrangement can affect both the fee and the timeline. Federal rules restrict lenders and others from influencing the appraiser’s judgment, which is why buyers and agents typically communicate through the lender rather than directly negotiating with the appraiser over value.

Who Pays for the Appraisal and When

In most financed purchases, the buyer pays for the appraisal. The CFPB notes that when you borrow money to buy or refinance a home, your lender may need to get a new appraisal and may require you to pay for it. The CFPB also lists appraisal fees among common closing fees and explains that buyers generally pay the costs associated with the transaction, though depending on the contract or state law the seller may end up paying some of them.

Timing varies. Some lenders collect the appraisal fee up front, after the buyer signals intent to proceed with the loan and before the appraisal is ordered. Others add it to the closing costs and collect it at settlement. Either way, a fee paid up front is usually not refunded if the deal later falls apart, because the appraiser has already done the work. Our closing costs guide explains how the appraisal fits alongside title charges, prepaid items and lender fees.

Buyers sometimes ask whether the seller can cover the appraisal. A seller credit toward closing costs can effectively offset it, but the CFPB cautions that sellers often require a higher price in exchange for such credits, so the buyer may still be paying the cost through the loan. Seller-paid pre-listing appraisals also exist, but a lender will usually order its own appraisal for the buyer’s loan rather than rely on one the seller commissioned.

Cash buyers are not required by a lender to get an appraisal, though some choose to pay for one anyway to check the price against market value.

Appraisal vs Home Inspection

Buyers often book both in the same few weeks, so the two blur together. They answer different questions.

The CFPB describes an appraisal as a written document that shows an opinion of how much a property is worth, and calls it an independent assessment of the property’s value. The appraiser’s main client is the lender, which wants to know whether the house supports the loan. Appraisers look at size, condition, quality, features and recent comparable sales, but the visit is often relatively brief and focused on value.

A home inspection is a detailed look at the condition of the house’s systems and components, from the roof and foundation to the electrical panel, plumbing and furnace. The inspector works for the buyer, not the lender, and the report is intended to help the buyer decide whether to proceed, negotiate repairs or credits, or plan maintenance. Our guide to home inspection vs appraisal lays out the differences side by side.

A few practical points follow from that split:

• An appraisal does not replace an inspection. An appraiser may not test the furnace, walk the roof or open the electrical panel. A house can appraise at full value and still need thousands of dollars in repairs.
• Inspection findings generally do not flow automatically to the appraiser. Our guide on whether a home inspection affects the appraisal explains when inspection issues can indirectly influence value, for example when visible defects are significant enough that the appraiser notes them too.
• The costs are separate. The appraisal fee goes on the loan paperwork; the inspection fee is usually paid directly to the inspector. Our average home inspection cost guide covers typical inspection pricing.

For a broader overview of how the two fit together in a purchase timeline, see home inspection and appraisal.

FHA and VA Appraisals

Government-backed loans add a layer the conventional appraisal does not always have. In addition to estimating value, FHA and VA appraisers check whether the house meets the program’s minimum property standards for safety, security and soundness. That can mean noting items such as peeling paint on older homes, missing handrails, inadequate heat, roof problems or utilities that are not working at the time of the visit.

FHA appraisals

FHA loans are insured by the Federal Housing Administration, part of HUD. The appraiser reports on whether the property meets HUD’s minimum property requirements, and if repairs are needed, the appraisal may be made subject to those repairs being completed before closing. That is different from a home inspection, which FHA does not require but which buyers are generally encouraged to get. Our guide to FHA requirements for home inspection explains how the appraisal and inspection differ under FHA rules.

VA appraisals

VA loans use appraisers assigned through the VA’s system, and the appraiser checks the home against VA minimum property requirements. VA publishes appraisal fee schedules that vary by area, so the fee may be more standardized than on a conventional loan; ask your lender what applies to your purchase. As with FHA, required repairs can delay closing if they must be completed and re-inspected first. See VA loan home inspection requirements for how inspections fit in.

For buyers using either program on an older Front Range home, it helps to have the inspection done early. If the inspector flags something likely to concern an FHA or VA appraiser, such as deteriorated paint or a non-functioning furnace, the buyer and seller have more time to address it before the appraisal deadline.

Your Right to a Copy of the Appraisal

Buyers sometimes assume the appraisal belongs only to the lender. For most purchase loans, that is not the case. According to the CFPB, for first-lien mortgage applications (and certain higher-priced mortgage loans), lenders are required to provide a free copy of all appraisals and other written valuations used to estimate the home’s value. The CFPB says lenders must send the copy promptly after the appraisal is completed and no later than three days before the loan closes.

The CFPB adds that you cannot be charged a fee for copies of an appraisal or other valuation, although you can be charged a reasonable fee for the lender’s cost of preparing the appraisal itself. These requirements come from the Equal Credit Opportunity Act valuations rule in Regulation B. Some timing details can be waived by the borrower in certain circumstances, so read anything the lender asks you to sign about appraisal delivery.

The CFPB encourages borrowers to actually read the appraisal. It describes what makes the property valuable and how it compares with other properties in the neighborhood. Checking it for factual errors, such as the wrong square footage, a missing bathroom, or a garage counted as one bay instead of two, is the first step if the value seems wrong.

What to Do After a Low Appraisal

A low appraisal means the appraiser’s opinion of value is below the contract price. Because lenders typically base the loan on the lower of the price or appraised value, the buyer may suddenly need more cash to close. The CFPB is direct about the risk, stating that it is very risky to purchase a home for more than the appraised value.

Common paths forward include:

1. Review the report and request a reconsideration of value

Start by getting and reading the appraisal. The CFPB explains that homebuyers and homeowners can ask a lender to reconsider a home valuation they believe is inaccurate, a process often called a reconsideration of value, or ROV. Borrowers can point out factual errors or omissions, inadequate comparable properties, or evidence that the appraisal was influenced by prohibited bias. Submit the request through the lender, with specific, documented corrections and any stronger recent comparable sales your agent can identify. An ROV does not guarantee a change.

2. Renegotiate the price

The CFPB suggests asking the seller to reduce the price, noting that the lower appraised value is strong evidence that the price was above market value. Sellers may agree to drop the price to the appraised value, meet partway, or offer other concessions.

3. Cover the appraisal gap

The buyer can bring additional cash to cover the difference between the appraised value and the price. Some contracts include an appraisal gap clause in which the buyer agrees in advance to cover a set amount. That strategy can win a competitive offer, but it shifts risk to the buyer, so it deserves careful thought and advice from your agent and lender.

4. Change the loan or walk away

Some buyers switch loan products or lenders, though a new appraisal may be required and timelines may not allow it. If none of those options work, the contract may allow the buyer to terminate. The CFPB suggests considering consulting an attorney, noting that depending on the contract terms there may be costs to cancelling, but that those costs are likely small compared to buying a home that isn’t worth what you paid. Whether earnest money is at risk depends on the contract’s appraisal provisions; our earnest money guide explains how deposits are typically handled.

Appraisal Alternatives, Refinances and Second Appraisals

Not every loan uses a traditional interior appraisal. The CFPB notes that a lender may need a new appraisal but may also use other ways to check the value of the home. Depending on the loan program, the property and the lender’s policies, that might mean an exterior-only appraisal, a desktop appraisal that relies on records and data rather than a full site visit, a hybrid approach in which someone else gathers property data for the appraiser, or an automated valuation. Some loans may qualify for an appraisal waiver. Whether any of these apply is the lender’s decision, and the fee, if any, will differ from a full appraisal.

A waived or limited appraisal can save money and time, but it also means less independent scrutiny of the price. For buyers, that makes the home inspection even more important, since no one else may be walking through the house with condition in mind.

Refinances follow similar rules. Homeowners refinancing or taking out certain home equity loans may pay for a new appraisal, and the value affects how much they can borrow and whether mortgage insurance applies. Getting the house in good order beforehand, and gathering a list of improvements with dates, helps the appraiser see what has changed since purchase.

Recently flipped homes are a special case. The CFPB explains that if a home counts as a “flip” under its rules and the buyer is getting a covered higher-priced mortgage loan, a second appraisal is required, and the lender must pay for it and cannot charge the buyer. The CFPB notes that not all flips are subject to this requirement; for example, flips in rural areas and properties acquired from a government agency are exempt.

How to Prepare for the Appraisal

Buyers do not usually attend the appraisal, and sellers control access to the house, but a few steps help on both sides:

• Sellers can provide a list of recent improvements with dates, such as a new roof, furnace or remodeled kitchen, which the agent can pass along through proper channels.
• Make sure the appraiser can reach every area: attic access, crawl space, mechanical room, garage and any outbuildings.
• Have utilities on, which matters especially for FHA and VA appraisals.
• Address obvious safety items, like missing handrails or broken windows, before the visit if possible.
• Keep the appraisal and inspection contingency deadlines on the same calendar so nothing slips.

An appraisal contingency and an inspection contingency are separate protections with separate deadlines. Our home inspection basics section and main guide to hiring a home inspector cover how to schedule the inspection so results arrive in time to act on them.

References

• What are appraisals and why do I need to look at them? — Consumer Financial Protection Bureau
• Do I have the right to receive a copy of my home appraisal? — Consumer Financial Protection Bureau
• My appraisal is less than the sale price. What does that mean for me? — Consumer Financial Protection Bureau
• Mortgage borrowers can challenge inaccurate appraisals through the reconsideration of value process — Consumer Financial Protection Bureau
• What fees or charges are paid when closing on a mortgage and who pays them? — Consumer Financial Protection Bureau

Want the inspection report in hand before the appraisal deadline? Get in touch and we can help you find a Front Range inspector who can work within your contract dates.