What is Appraisal?
An appraisal is an independent professional estimate of a property’s market value, usually ordered by the lender before approving a mortgage. The appraiser inspects the home and compares it to recent sales of similar properties. Lenders rely on it to make sure they aren’t lending more than the home is worth.
Example: A home in contract for $650,000 appraises at $625,000; the lender finances based on the lower value, so the parties renegotiate or the buyer covers the gap.