In a mortgage-financed home purchase, the lender orders the home appraisal, picks the appraiser, and controls the timing, while the buyer pays the fee. In an all-cash purchase, no one is required to order one, so the buyer hires and pays an appraiser directly if they want independent confirmation of value. A seller can also order a pre-listing appraisal on their own, but a buyer’s lender won’t rely on it.
Why the Lender Orders It in a Financed Purchase
When you apply for a mortgage, the house is the lender’s collateral, so the lender has a direct financial interest in knowing what it’s worth. Federal law prohibits a creditor from extending a higher-priced mortgage loan without first obtaining a written appraisal performed by a state-certified or licensed appraiser who physically visits the interior of the property.1Office of the Law Revision Counsel. 15 U.S.C. 1639h – Property Appraisal Requirements Regulation Z implements that rule by barring lenders from closing on certain mortgage loans until the appraisal is complete.2eCFR. 12 CFR 1026.35 – Requirements for Higher-Priced Mortgage Loans
Even for conventional loans that fall below the “higher-priced” threshold, federal banking regulations still require the institution to obtain either a full appraisal or an appropriate evaluation before extending credit.3eCFR. 12 CFR 34.43 – Appraisals Required; Transactions Requiring a State Certified or Licensed Appraiser If you default and the lender has to foreclose, it needs confidence that the house will sell for enough to recover the loan. That’s the reason the lender, not you and not the seller, chooses the appraiser.
Keeping the Appraiser Independent of the Deal
Federal law also makes it illegal for anyone involved in a mortgage transaction to pressure, coerce, or steer an appraiser toward a particular value.4Office of the Law Revision Counsel. 15 U.S.C. 1639e – Appraisal Independence Requirements A loan officer can’t call the appraiser and ask for a specific number to save a deal.
To enforce that separation, most lenders route appraisal orders through an Appraisal Management Company. The AMC takes the property details from the lender, assigns a local appraiser from a rotating panel, handles scheduling with the listing agent or homeowner, and reviews the finished report before passing it on for underwriting. Neither you nor your loan officer picks the individual appraiser who shows up. This buffer exists because inflated appraisals were a major contributor to the 2008 housing crisis.
Who Pays and How Much
The buyer pays for the appraisal in almost every financed purchase. You’ll see the charge either as an upfront fee collected during the loan application or as a line item on your closing disclosure. A typical single-family appraisal runs between roughly $300 and $500 nationally, with higher fees in remote areas or on unusual properties.
You cover this cost whether the appraisal supports the contract price or not, and whether the loan actually closes or falls apart. In competitive markets some sellers will credit the buyer for appraisal costs as a concession, but that’s a negotiated term rather than a standard practice.
When the Lender Pays for a Second Appraisal
Federal rules force the lender to order a second appraisal, and absorb its cost, in certain “flip” situations involving higher-priced mortgage loans. Two appraisals are required if the seller acquired the property within the previous 90 days and the new sale price exceeds the seller’s purchase price by more than 10 percent, or within 91 to 180 days at a markup exceeding 20 percent. The two reports must come from different appraisers, and the lender can only charge the consumer for one of them.5eCFR. 12 CFR 34.203 – Appraisals for Higher-Priced Mortgage Loans
When the Lender Can Skip the Appraisal
Not every mortgage triggers a traditional appraisal. Two paths can take it off the table.
For certain residential transactions below $400,000, federal banking regulators allow lenders to use a less formal property evaluation instead of a full appraisal by a licensed appraiser.6FDIC. New Appraisal Threshold for Residential Real Estate Loans This mostly applies to portfolio loans held by banks and credit unions rather than loans sold to Fannie Mae or Freddie Mac.
Separately, Fannie Mae and Freddie Mac offer appraisal alternatives for qualifying purchases. Fannie Mae’s Value Acceptance program, formerly known as appraisal waivers, allows eligible purchase loans on primary residences and second homes to close without a traditional appraisal, with loan-to-value ratios up to 90 percent.7Fannie Mae. Fannie Mae Announces Changes to Appraisal Alternatives Requirements Whether you receive a waiver offer depends on the property type, your credit profile, and the data available about the home. If a waiver is offered, your lender can accept it and skip the appraisal entirely. You can still ask for an appraisal if you want independent confirmation before committing.
Cash Buyers and Sellers Who Order Their Own
In a cash purchase, no lender is involved, so no one is required to order an appraisal. The decision is voluntary. Most cash buyers still get one, because sending several hundred thousand dollars without an independent read on value is a gamble few people want to take. Here you hire the appraiser yourself and pay directly.
Sellers sometimes order their own appraisal before listing. A pre-listing appraisal can help set a realistic asking price, flag condition issues that would weigh on value, and provide a data point to use in negotiations if a buyer’s lender-ordered appraisal later disagrees. The seller picks the appraiser, pays the fee, and controls whether to share the results. One boundary matters here: a buyer’s lender will not accept a seller-ordered appraisal for underwriting. The lender will order its own regardless.
Your Right to a Copy of the Appraisal
Even though the lender orders and controls the appraisal, you are entitled to a free copy. Under the Equal Credit Opportunity Act’s implementing regulation, a lender must provide you with a copy of every appraisal and written valuation tied to your mortgage application. The lender has to deliver it either promptly after the appraisal is finished or at least three business days before closing, whichever comes first.8eCFR. 12 CFR 1002.14 – Rules on Providing Appraisals and Other Valuations
You can waive the three-day advance delivery requirement and agree to receive the copy at closing, but the waiver itself must be signed at least three business days before closing.8eCFR. 12 CFR 1002.14 – Rules on Providing Appraisals and Other Valuations If the loan falls through, the lender still has to send you the appraisal within 30 days of deciding the loan won’t close.9eCFR. 12 CFR Part 1002 – Equal Credit Opportunity Act (Regulation B) If a lender tells you the report belongs to them, that isn’t accurate. You paid for it, and federal law guarantees you a copy.
Why It Matters If the Value Comes In Low
Who ordered the appraisal becomes a practical issue the moment the number lands below the contract price. Because the lender ordered the report and controls the process, neither you nor the seller can replace it with a more favorable one. The lender will lend only against the appraised value, so your choices are to negotiate a price reduction with the seller, bring extra cash to cover the gap, submit a formal reconsideration of value with supporting comparable sales before the loan closes, or terminate under an appraisal contingency if your contract includes one. The report belongs to the lender’s process; your leverage runs through those channels, not through ordering a different appraisal.