What Is An Appraisal?

Whether you’re buying a home, refinancing your mortgage, or preparing to sell, the term “appraisal” is bound to come up. An appraisal plays a critical role in determining a property’s value and can influence how much a lender is willing to finance. At Crescent Title, we work with buyers, sellers, real estate agents, and lenders every day to ensure that the title and closing process goes smoothly, and that includes navigating the appraisal stage with clarity and confidence.

What Is an Appraisal?

An appraisal is a professional, unbiased opinion of a home’s market value. It is usually required by mortgage lenders during the loan process to ensure that the property is worth the amount being borrowed. If you are buying a home, the appraisal helps confirm that you’re not overpaying. If you are refinancing, it helps the lender determine how much equity you have in your property.

Appraisals are conducted by licensed or certified professionals known as appraisers, who are trained to evaluate real estate based on a range of factors. Their final report gives the lender a reliable estimate of the property's current fair market value.

Why Appraisals Matter

Appraisals are one of the most important parts of any real estate transaction involving a mortgage. Here’s why:

Protects the buyer: Ensures that the purchase price aligns with the home’s actual market value.

Protects the lender: Confirms that the loan amount is appropriate for the property’s value.

Affects negotiations: If the appraisal is lower than the agreed purchase price, it may lead to renegotiations or even termination of the contract.

Establishes equity: In refinancing, an appraisal determines how much equity you have and how much you can borrow.

Without a proper appraisal, lenders would be at higher risk of financing loans that exceed the value of the property, which could lead to financial loss in case of default.

When Is an Appraisal Required?

Appraisals are typically required in the following scenarios:

Buying a home with a mortgage: Most lenders require an appraisal before final loan approval.

Refinancing a mortgage: Especially if you want to remove mortgage insurance or borrow cash based on equity.

Selling a home in a unique market: Appraisals may be used to justify list prices or support negotiations.

In rare situations, such as certain cash purchases, an appraisal may not be necessary. However, even in those cases, many buyers choose to order one for peace of mind.

How Is a Home Appraisal Conducted?

The appraisal process involves more than just a quick walk-through. Appraisers follow a structured process based on national and local guidelines to determine the value of a home.

Step 1: Property Visit

The appraiser schedules an appointment to visit the home. This visit typically lasts 30 minutes to an hour and includes:

• Measuring square footage
• Taking photographs of interior and exterior
• Noting the layout, condition, and features of the home
• Checking recent upgrades or improvements
• Reviewing the number of bedrooms and bathrooms
• Looking at curb appeal and landscaping

The appraiser will not perform a full home inspection but may note visible problems such as cracks, roof damage, or outdated features.

Step 2: Market Research

Once the site visit is complete, the appraiser researches comparable sales, often referred to as “comps.” These are recently sold homes in the area that are similar in size, condition, age, and location. Comps help set a baseline for market value.

Step 3: Final Report

The appraiser compiles all findings into a formal document called the Uniform Residential Appraisal Report (URAR). This report includes:

• Property details
• Recent comparable sales
• Market trends
• Adjustments based on differences between the subject property and comps
• Final estimated value

This report is sent to the lender, who uses it to determine how much they are willing to finance.

What Factors Influence Appraised Value?

Many elements impact a home’s appraised value. Here are some of the most important:

Location

Homes in desirable neighborhoods, near schools, parks, or with good access to transportation, often appraise higher.

Size and Layout

Larger homes with efficient layouts usually have higher values than smaller, cramped properties.

Condition

Updated kitchens, bathrooms, roofs, and HVAC systems can improve value, while outdated or damaged features can reduce it.

Comparable Sales

The prices of recently sold homes in the same area heavily influence the final number.

Market Conditions

Rising or falling home values in your area can affect the appraised value even if your home hasn’t changed.

What Happens If the Appraisal Comes in Low?

One of the most stressful moments in a real estate transaction can be when the appraisal comes in below the contract price. When this happens, the lender will not finance the full amount, creating a financing gap.

Here are common options for dealing with a low appraisal:

1) Renegotiate the price: The buyer and seller may agree to lower the sale price to match the appraisal.

2) Pay the difference: The buyer can cover the gap in cash to make up the difference between the loan and the sale price.

3) Dispute the appraisal: If you believe the appraiser missed key information, you can request a review or second opinion.

4) Cancel the deal: If an agreement cannot be reached, the contract may allow either party to walk away.

A low appraisal doesn’t always mean the home isn’t worth the price; it may reflect conservative valuation or unique features that don’t align well with local comps.

How to Prepare for an Appraisal

Whether you’re a buyer, seller, or refinancing homeowner, here are steps you can take to help the process go smoothly:

For Sellers:

1) Clean and declutter the home

2) Make minor repairs like fixing leaky faucets or patching drywall

3) Compile a list of recent upgrades, remodels, or improvements

4) Boost curb appeal with landscaping or pressure washing

For Buyers:

1) Ensure access to the home for the appraiser

2) Work with your agent to provide comps if you believe the home is undervalued

For Refinancers:

1) Treat the appraisal like a showing by staging and tidying the home

2) Present documents showing recent improvements or repairs

Appraisers strive to be impartial, but a well-maintained and prepared home makes a good impression and helps avoid potential deductions in value.

The Role of Crescent Title in the Appraisal Process

While title companies do not conduct appraisals, we play a key supporting role in the homebuying process. At Crescent Title, we help coordinate with lenders, real estate agents, and other parties to ensure the appraisal is ordered at the right time and doesn’t delay the closing.

Here’s how we support the process:

• Verify clear title to the property before closing
• Coordinate with lenders to help meet closing timelines
• Offer advice on how appraisal outcomes may affect financing
• Help ensure smooth, accurate documentation leading to closing day

We are your trusted partner from contract to close, making sure every part of the process, including the appraisal, fits into the big picture.

Do Appraisals Expire?

Yes, appraisals have a shelf life. Most lenders will only accept an appraisal that is no more than 120 days old, although in some cases this can be extended slightly.

If your closing is delayed, your lender may require a new appraisal or an update to the original one. This can be an additional cost and timeline consideration.

How Much Does an Appraisal Cost?

The cost of a home appraisal varies depending on location, home size, and complexity, but typically ranges between $300 and $600. Larger or more unique properties may cost more. This fee is usually paid by the buyer as part of the closing costs, but it is sometimes required upfront.

Can You Challenge an Appraisal?

Yes, in some cases. If you receive an appraisal that seems inaccurate or incomplete, you can:

• Ask for a reconsideration of value from the lender
• Provide additional comparable sales or corrections
• Request a second appraisal (at your own cost, unless the lender agrees)

Your real estate agent or lender can help guide this process, although changes to the appraisal are not guaranteed.

Why Appraisals Are Essential

The appraisal is one of the most important tools in the homebuying and financing process. It protects all parties involved—buyers, sellers, and lenders—by providing a professional assessment of a property’s value. Understanding how it works helps you anticipate potential issues and navigate your transaction with greater peace of mind.