Selling and buying a home are both long-drawn, elaborate, and expensive affairs for all parties involved. Among the many fees involved in the process are appraisal fees.

Simply put, appraisal fees are the fee paid to a professional appraiser to look at the property in question and deliver an estimated value for the same. This is known as an appraisal report.

On average, the cost of an appraisal varies between $300 and $425 for a single-family home. Expect to pay more for larger homes, and less for smaller ones. The minimum cost is around $260, while the maximum is around the $800 mark. 

We’re going to bring you up to date with everything you need to know about appraisal fees.

When do appraisals happen?

home inspection

A home appraisal happens after a seller has made an offer on a home which the buyer accepts, but before the sale is finalized. This is what follows a pre-sale home inspection.

If the inspection finds issues with the home, then the cost of the home appraisal does not need to be paid.

In case the inspection does not throw up any major red flags, the cost of the home appraisal is most often borne by the buyer as a part of closing costs, although in some cases, it is negotiated to be borne by the seller.

Why are appraisals important?

Home appraisals are important to everyone involved in the process of home purchases, from the mortgage lenders to the buyers and sellers. Let us take a look at why.

From a lender’s perspective

When a buyer takes out a mortgage loan, the home works as collateral for the loan. This means that if the borrower defaults on paying the mortgage lender over a period of time, the lender can foreclose on the home, take possession of it and resell it to recover their losses.

A home appraisal assures lenders that the sale price being asked for is in line with the actual value of the home. Based on the appraised value of the home, lenders can decide how much can be extended as a loan to the borrower. This also guarantees them that in case the borrower fails to repay the loan, the property value is sufficient for them to recover their money during foreclosure. The lower the risk is for the lender, the lower the interest rates they can offer. 

For example, if a lender loans you $350,000 on a property valued at $150,000 and you defaulted on the payments, it would be almost impossible for the lender to recover the amount by reselling the property.

From a buyer’s perspective

Home buyer trends

A home appraisal is a lender’s requirement, which means that every mortgage lender requires an appraisal to be done before signing off on a loan. This appraisal is usually paid for by the buyer unless negotiated otherwise with the seller.

While the few hundred dollars it costs to pay the professional appraiser for the service of inspecting the home and arriving at a fair estimate of what the home is worth may seem like an extra burden, it is well worth the buyer’s money to ensure they do not end up paying more for a property than it is worth.

From a seller’s perspective

Seller’s regret, from accepting a low-ball offer on a home is something all sellers can avoid, thanks to a home appraisal. Home appraisals tell sellers what their property value is, helping them ensure they get top dollar when they sell their home. This makes it worth the seller’s while, even if the seller pays for the appraisal.

Read more: Seller’s preparation for a home inspection

For an unbiased perspective

The company financing the home mortgage loan for the buyer may not even be in the same city, or in some cases, the same country as the home. This means they have no way of knowing the neighborhood, real estate prices and trends, or even the build quality of the home in question.

Home appraisers are third-party vendors who are in no way emotionally or financially involved with any of the parties involved with the sale of the property. This is another reason why lenders depend on their appraisal of homes before granting home loans.

Importance of the appraised value of a home

appraisal fees

The appraised value of a home needs to be high enough to justify the loan the buyer is getting. It should be in line with the sale price of the home.

It is important for lenders to know that there is enough value in the home for them to recover their loan. This is known as the loan-to-value (LTV) ratio. Ideally, the LTV should be below 80% for the lender to feel safe. If it is higher, the borrower may be viewed as a high-risk borrower and may need to additionally invest in private mortgage insurance.

If the appraisal comes in too low, the loan is again not likely to go through as-is. The borrower may need to re-appraise the home or reapply for a smaller loan. 

In some cases, making a larger down payment on the home can help push the loan through in the borrower’s favor. 

However, an appraisal coming in higher than the sale price is hardly ever a problem for the loan to be approved. This is because the increased value of the home means the borrower has more equity in the home.

Read more: Mortgage on as is property

The home appraisal process

Let us take a quick look at the process that professional home appraisers follow to evaluate a home.


Appraisers will take a few hours to slowly go through the inside of the home. They will take photographs and measurements to confirm the square footage of the home, the number of rooms, recent home improvements, condition of the home, health and safety hazards, the layout of the home, and other details.


The appraisers will also compare the value of the home with other homes of similar size and features in the neighborhood. 

Appraisal report

Based on their findings, home appraisers publish a detailed report with what they observed of the home in question, including the appraised market value and a list of comparable home prices in the same area. This report is submitted to all the parties involved within seven business days.

Keep in mind though that this appraisal report will not tell buyers whether there are any major issues with regard to structural issues, health and safety hazards as well as other red flags with the home. That is published in the home inspection report, which is conducted before the home appraisal.

Hiring a home appraiser

hire a home appraiser agent

Home appraisers are hired by the lenders, even if the buyers and sellers pay for the service. This means neither party has any bargaining ability with the appraiser and pays the home appraisal costs charged by the lender.

However, buyers and sellers can definitely check the credentials of the person appraising the home. All they will need to do is search on the National Registry of Appraisers using either location or license number. If the search shows any discrepancies or pending investigations against the appraiser, the matter ought to be brought to the lender’s notice at the earliest.

Read more: Probate sale

Home sale expenses: All about appraisal fees was last modified: October 10th, 2022 by Narayan Shrouthy
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Only inexperienced people underestimate the value of a home inspection.