What is a home appraisal and why does it matter?

A home appraisal is an independent estimate of a property's market value, performed by a licensed or certified appraiser. Lenders order one before funding your loan to make sure they're not lending more than the home is worth.

What appraisers look at

• Recent comparable sales (comps) in the area
• Home size, condition, and features
• Location, lot, and neighborhood factors
• Any visible defects that affect value or safety (especially for FHA/VA loans)

What happens if the appraisal comes in low?

A low appraisal means the lender won't fund the full contract price. You have a few options: the seller reduces the price, the buyer makes up the difference in cash (an "appraisal gap"), the buyer and seller split the difference, or the deal falls apart. Which path makes sense depends on the market and how much either side wants the deal.

If you may need to cover part of an appraisal gap, check the Closing Cost Estimator first so you know whether the extra cash is realistic.

VA and FHA appraisals

VA and FHA appraisals also include a Minimum Property Requirements (MPR) check. Appraisers flag safety and structural issues that must be resolved before the loan can close. This is why some sellers are hesitant to accept government-backed loans — though with the right agent and lender, it's manageable.