When a bank appraises a house, it hires an independent licensed appraiser to estimate the home’s current market value so the loan amount stays in line with what the property is actually worth. The appraiser inspects the home, pulls recent sales of similar nearby properties, adjusts those sales up or down to match your house, and delivers a written report to the lender’s underwriter. From the day the appraisal is ordered to the day the report lands, plan on roughly one to three weeks. For most residential mortgages above $400,000, federal rules require a state-licensed or certified appraiser; below that threshold lenders may use alternative valuations, though many still order a full appraisal anyway.1eCFR. 12 CFR 34.43 – Appraisals Required; Transactions Requiring a State Certified or Licensed Appraiser
Who Orders the Appraisal and Picks the Appraiser
The lender orders the appraisal, not you and not your real estate agent. Federal law makes it illegal for a loan officer, agent, or anyone else with a financial stake in the closing to handpick or pressure the appraiser, so most banks route the assignment through an appraisal management company that pulls an available appraiser from its panel.2Office of the Law Revision Counsel. 15 USC 1639e – Appraisal Independence Requirements Every appraiser on that panel holds a valid state license or certification, follows the Uniform Standards of Professional Appraisal Practice, and cannot have any financial interest in the property or the deal.
You still pay the fee, even though the appraiser works for the lender. A standard single-family appraisal generally runs $300 to $600, with higher costs for larger, remote, or complex properties. It shows up on your Loan Estimate as a service you cannot shop for.3Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure Forms
What the Appraiser Does at the House
The visit for a typical single-family home lasts 30 minutes to an hour. The appraiser measures the exterior and interior to calculate gross living area, counts bedrooms and bathrooms, and gives the structure a visual once-over: roof, foundation, siding, HVAC, plumbing, electrical panel. Finishes matter too. Updated kitchens, hardwood floors, and modern fixtures push value up; deferred maintenance pushes it down.
Away from the property, the appraiser pulls public records to confirm tax assessments, lot dimensions, and zoning. If you’ve added square footage or done major renovations, keep the building permits handy. Appraisers are required to comment on any addition built without a permit and whether the unpermitted work affects value.4Fannie Mae. Improvements Section of the Appraisal Report An unpermitted room addition may not count toward gross living area at all, which can pull the appraised value well below what you were expecting.
The inspection isn’t limited to the property itself. Appraisers note conditions outside your control that can drag on value, including proximity to high-voltage power lines, commercial noise, busy roads, and environmental hazards. These count as external obsolescence and lead to negative adjustments because no renovation can fix what’s happening next door.
How the Appraiser Arrives at the Number
Three valuation methods exist, but one carries almost all the weight in residential work.
Sales Comparison Approach
This is the backbone of nearly every residential appraisal. The appraiser identifies at least three recently closed comparable sales in the area and adjusts their prices for differences from your property.5Fannie Mae. Comparable Sales If a comp sold for $400,000 but had an extra bathroom, the appraiser subtracts the estimated bathroom value from that comp’s price. If your house has a two-car garage and the comp had a single, value gets added to the comp to bring it in line with yours. Every adjustment must be supported by market data, not guesswork.6Fannie Mae. Adjustments to Comparable Sales
The whole approach depends on the quality of the comps. Appraisers want sales that are recent, geographically close, and similar in size, age, and style. In a fast-moving market a six-month-old sale may already be stale; in a rural area the closest comparable may sit miles away. This is where most valuation disputes start: someone believes the appraiser chose the wrong comps or made flawed adjustments.
Cost Approach
The cost approach estimates land value, adds current construction costs to rebuild the home, then subtracts depreciation for age, physical wear, and outdated design. Fannie Mae doesn’t require it for most residential appraisals, but USPAP requires whichever approach is needed for credible results.7Fannie Mae. Cost and Income Approach to Value In practice it appears mostly with new construction or unusual properties where good comps are scarce.
Income Approach
For multi-unit properties or homes with rental income, the appraiser may convert projected rent into a value using a gross rent multiplier. If similar two-unit properties rent for $2,000 monthly and sell for roughly 150 times monthly rent, a property producing $2,000 a month values around $300,000 under this method. For a standard owner-occupied single-family home, this approach rarely comes into play.
Extra Rules for FHA and VA Loans
Government-backed loans add requirements on top of the value opinion. If you’re using an FHA or VA loan, the appraiser is also checking whether the property meets specific health, safety, and durability standards.
FHA Minimum Property Requirements
FHA appraisals follow HUD’s Minimum Property Requirements, which demand that the home be “safe, sound, and secure.” The appraiser must confirm safe pedestrian and vehicle access, no overhead power lines running directly over the dwelling, and no encroachments onto adjacent properties or easements.8U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1 Onsite hazards or nuisances the appraiser flags have to be corrected before closing. That covers peeling paint, missing handrails, exposed wiring, broken windows, and nonfunctional plumbing or heating.
FHA also sets durability standards that go past what building codes require, covering items like doors, windows, gutters, cabinets, and floor coverings.9U.S. Department of Housing and Urban Development. Minimum Property Standards Resources If any of these show up in poor condition, the report will list required repairs, and someone has to complete them before the loan can close.
VA Tidewater Process
VA appraisals enforce minimum property requirements too, and they add a step for potential low values. Under the Tidewater process, if the appraiser sees the value likely coming in under the purchase price, they notify the lender before finalizing the report. The lender or a designated point of contact has two working days to submit additional comparable sales or market data supporting a higher value. The appraiser considers the new information and includes a Tidewater addendum in the final report explaining whether it changed the outcome. Conventional and FHA loans don’t offer this heads-up.
What the Bank Does With the Report
The appraiser files the analysis on the Uniform Residential Appraisal Report (Form 1004 for a traditional appraisal with a physical inspection).10Fannie Mae. Appraisal Report Forms and Exhibits The report goes to underwriting for a quality-control review, where underwriters check that the comparables fit, adjustments hold up, and everything meets secondary-market guidelines from Fannie Mae or Freddie Mac.
Federal law requires the lender to give you a copy of the completed appraisal promptly after it’s finished, or at least three business days before your loan closes, whichever comes first.11eCFR. 12 CFR 1002.14 – Rules on Providing Appraisals and Other Valuations You can waive the timing requirement in writing at least three business days before closing. Read the report when you get it. You paid for it, and it’s the document you’ll need if you want to challenge the value.
An appraisal doesn’t last forever. The report must be dated within 12 months of the closing date. If it’s more than four months old but under 12, the lender must order an appraisal update, where the appraiser reinspects the exterior and reviews current market data to check for a decline. If the value has dropped, the lender must order a new appraisal.12Fannie Mae. Appraisal Age and Use Requirements Desktop appraisals get a tighter window: a new report is required past four months. Delayed closings can push you into paying for another one.
When the Appraisal Comes In Low
If the appraised value lands below your agreed purchase price, the lender will finance only against the lower figure, leaving a gap between the loan amount and what you owe the seller. Your options depend on your cash reserves and how flexible the seller is.
- Ask the seller to lower the price to match or approach the appraised value. In a slower market, sellers are more likely to agree because the next buyer will hit the same wall.
- Cover the gap in cash, effectively raising your down payment. Some buyers plan for this in competitive markets with an appraisal gap clause in the purchase contract, committing to cover a shortfall up to a set dollar amount.
- Split the difference. The seller comes down partway, you bring extra cash, and both sides absorb some of the gap.
- Walk away. If your contract includes an appraisal contingency, you can cancel the deal and recover your earnest money when the appraisal falls short of the purchase price.
Requesting a Reconsideration of Value
Before accepting the number, you can ask the lender to initiate a reconsideration of value, a formal request for the appraiser to reassess based on new information.13Federal Register. Interagency Guidance on Reconsiderations of Value of Residential Real Estate Valuations You’ll need specific, verifiable evidence: comparable sales the appraiser may have missed, factual errors in the report like an incorrect bedroom count, or documentation of improvements the report didn’t capture. Vague complaints that the number feels low won’t move it.
Federal regulators expect lenders to run a clear ROV process and to tell borrowers how to raise concerns early enough for the issue to be resolved before the credit decision. If you believe the valuation was influenced by discriminatory bias, flag that specifically. Lenders are required to handle discrimination allegations through a separate review track in addition to the standard ROV.
When the Bank Skips the Full Appraisal
Not every mortgage needs someone walking through your house with a tape measure. Two streamlined alternatives exist, each with eligibility limits.
In a desktop appraisal, the appraiser develops a value opinion from MLS data, public records, and prior appraisal reports without visiting the property. Fannie Mae permits desktop appraisals for purchase transactions on one-unit principal residences with a loan-to-value ratio of 90% or less, provided the loan receives an automated underwriting approval.14Fannie Mae. Desktop Appraisals The appraiser uses Form 1004 Desktop instead of the traditional report.
A hybrid appraisal sits between the two. The appraiser still values the property remotely, but a third-party inspector physically visits the home to collect standardized interior and exterior data. The appraiser then reviews that inspection report alongside market data to reach a conclusion.15Fannie Mae. Hybrid and Desktop Appraisal Forms Quick Reference Someone still goes inside; it just isn’t the appraiser.
On some loans, Fannie Mae’s automated underwriting system offers “value acceptance,” waiving the appraisal requirement entirely and relying on existing data, including prior appraisals, to confirm value. To qualify, the property must be a one-unit home, the loan must receive an automated approval, and the purchase price or estimated value must be under $1,000,000.16Fannie Mae. Value Acceptance Manufactured homes, co-ops, two- to four-unit buildings, and renovation loans are excluded. The waiver offer expires after four months, so a stalled closing can push you back into needing a full appraisal.
How to Prepare for the Appraiser’s Visit
You can’t control the final number, but you can control the information the appraiser has. Before the visit, pull together a list of capital improvements: a new roof, replaced windows, an updated HVAC system, a kitchen remodel. Include dates, costs, and building permits. Permitted work removes any doubt about whether the added space or upgraded systems count toward value.
On the day, make sure every room is accessible. A locked attic, cluttered crawl space, or blocked water heater slows the process and can lead to incomplete observations. Clear the path to mechanical systems. If you have a plat map or recent survey, have it out. Cosmetic tidying won’t move the value, but a well-kept home signals maintenance, and overall condition does factor into the analysis.
For FHA or VA loans, focus on health and safety before the appraiser walks in. Working smoke detectors, handrails on all stairs, no peeling paint, no exposed wiring, and functional plumbing are all mandatory. Fixing these ahead of time costs far less than a required-repairs addendum that pushes your closing back.