When selling your home, one of the most important — yet often misunderstood — steps is the home appraisal. While the buyer orders it through their lender, the appraisal directly affects you as the seller. If the home appraises too low, it could delay or derail the sale altogether.
Understanding what the appraisal is, how it works, and how to prepare for it can help you protect your deal and avoid last-minute surprises.
What Is a Home Appraisal?
A home appraisal is a professional assessment of your property’s fair market value, conducted by a licensed appraiser. The lender requires it to ensure the home’s value supports the loan amount. In most cases, it happens after an offer is accepted but before closing.
For example, if a buyer offers $400,000 but the appraisal comes in at $375,000, the lender will only approve a loan based on the lower value — creating a gap the buyer or seller must cover.
Why the Appraisal Matters for Sellers
- Pricing Accuracy: If the appraisal is lower than your contract price, it could mean price negotiations, extra closing delays, or even deal cancellations.
- Market Feedback: An appraisal that matches or exceeds the sale price supports your pricing strategy — and gives both parties confidence in the deal.
- Financing Approval: Lenders won’t approve a mortgage for more than the appraised value. That’s why an accurate valuation is critical to closing on time.
What Appraisers Look For
Appraisers assess your home based on recent comparable sales, location, size, layout, condition, and features. They’ll consider:
- Number of bedrooms and bathrooms
- Square footage
- Lot size and usability
- Condition of the roof, HVAC, plumbing, and foundation
- Recent updates and renovations
- Neighborhood trends and nearby sales (comps)
They’re not judging your style — but they are evaluating function, structure, and long-term value.
How to Prepare for the Appraisal
You can’t control the market, but you can make your home shine. Here’s how:
- Clean and Declutter: A tidy home helps appraisers move through efficiently and see the property clearly.
- Complete Small Repairs: Fix leaky faucets, squeaky doors, chipped paint, and loose hardware. These details affect condition scores.
- Improve Curb Appeal: Mow the lawn, trim bushes, and touch up the entryway. First impressions matter.
- Make a List of Upgrades: Provide a written summary of renovations or improvements — including dates and costs — for the appraiser’s reference.
- Share Relevant Comps: Your real estate agent may want to share recent comparable sales that support your sale price, especially if the market is shifting.
What Happens If the Appraisal Comes in Low?
If the appraised value is lower than the purchase price, you have a few options:
- Lower the Sale Price: You may choose to match the appraisal to keep the deal moving.
- Negotiate the Difference: The buyer could cover the gap in cash, or you could split the difference.
- Challenge the Appraisal: If you believe there are errors or better comps, your agent can submit a rebuttal.
- Cancel the Contract: If you can’t reach an agreement, the buyer may walk — especially if there’s an appraisal contingency.
Conclusion
The home appraisal isn’t just a formality — it plays a critical role in whether your sale closes on time and at the agreed-upon price. With the right preparation, clear communication, and expert support, you can set your home up for a smooth appraisal and a successful sale.
Talk to your real estate agent early about what to expect, and take proactive steps to present your home in the best possible light. A little effort now can prevent big headaches later.