What Is an Appraisal in Real Estate?
A real estate appraisal is a professional estimate of a property’s fair market value, prepared by a licensed appraiser. Lenders use appraisals to confirm that the home’s value supports the loan amount, protecting both buyer and lender from overpaying.
✅ How a Home Appraisal Works
- Appraiser visits the property to inspect condition, size, features, and upgrades.
- Compares recent sales (“comps”) of similar homes in the same area.
- Analyzes market trends to determine current value based on supply, demand, and location.
- Issues an appraisal report showing the estimated market value used by lenders and buyers.
For financed sales, the lender typically orders the appraisal after the offer is accepted.
💡 Why Appraisals Matter in Real Estate
- For buyers: Confirms that you’re not paying above market value.
- For lenders: Ensures the property is adequate collateral for the loan.
- For sellers: Helps validate pricing strategy and support negotiations.
If the appraisal comes in low, the buyer and seller may need to renegotiate the price or increase the down payment. This is where an appraisal contingency protects the buyer.
📍 Appraisals and FSBO Sellers
For FSBO sellers using Brokerless, understanding appraisals helps you price competitively and avoid delays. A realistic list price backed by comparable sales can prevent appraisal gaps once you’re under contract.
You can also order a pre-listing appraisal for added confidence before you list on the MLS.