Property Appraisal 101: What It Is, What to Expect, and What If It's Low?

If you're buying a home and getting a mortgage, your lender is going to require a property appraisal. Why? Because the bank wants to make sure the home is worth what you're offering to pay before lending you a few hundred thousand dollars or more.

In simple terms: the appraisal protects the lender from overfinancing a property. But it can also affect your buying power, your loan approval, and sometimes even whether the deal moves forward.

Who Pays for the Appraisal?

In most cases, the buyer pays for the property appraisal, and it's typically an out-of-pocket cost due upfront. Fees vary, but in California it often ranges from $500 to $700.

What Happens During an Appraisal?

The lender will hire a licensed third-party appraiser who visits the property to assess its value. They'll look at:

• The home's size and layout
• Condition of the property
• Recent upgrades or renovations
• Comparable sales in the area ("comps")
• Overall market trends

Appraisers are independent from the buyer, seller, and lender. Their goal is to give an unbiased opinion of what the home is worth in today's market.

Do I Get a Copy of the Report?

Here's what surprises many buyers: you almost never receive the full appraisal report. Instead, you'll usually hear one of two things:

• "The appraisal came in at or above the purchase price." If that's the case, everything moves forward as planned.
• If the appraisal comes in below the purchase price, you will be told the exact appraised value. That's where things can get tricky.

What Happens If the Appraisal Comes in Low?

If the property appraises for less than what you're offering, the bank will not lend more than the appraised value. That leaves you with a few options:

1. Renegotiate with the seller. You can ask the seller to reduce the purchase price to match the appraised value. This is typically handled through the Request for Repairs process.

2. Pay the difference out of pocket. If you're still in love with the home, you can choose to cover the gap between the appraisal and your offer using your own funds.

3. Back out (if you have an appraisal contingency). If your offer includes an appraisal contingency, you can walk away with your earnest money intact. In my experience, a low appraisal is seldom reason for canceling a deal. Sellers are usually willing to negotiate around it. But if you can't find middle ground, you're protected.

What Comes Next?

After the appraisal, the next step in most cases is negotiation. That might include price adjustments or other concessions. Head over to my full guide on the Request for Repairs phase, where I walk through exactly how to handle seller negotiations, including how appraisal issues might influence your strategy.

Your Takeaway

The property appraisal is one of those hidden-in-plain-sight steps in the homebuying process. You don't control it, you usually don't see it, and yet it can dramatically shape the outcome of your purchase.

That's why having a good agent matters. If your appraisal comes in low, we'll review your options, renegotiate if needed, and make sure you're not overpaying or losing out unnecessarily.

Have questions about appraisals, contingencies, or seller negotiations? I'd love to help you move forward confidently.