Who Pays For A Home Appraisal, Buyer or Seller?

An appraisal is one of the many elements of purchasing a house that leaves first-time buyers confused. If you plan to buy a house, your lending institution will want to know if the home you want to buy is worth its sale price.

Your mortgage lender will also inspect the house to check if anything can appreciate or depreciate your home’s worth. For them to do this, they need home appraisals for borrowers. Let’s now dive deeper into who pays for home appraisals, whether that’s the buyer or seller, and everything you need to know.

What Is A Home Appraisal?

In order to understand who pays for a home appraisal, whether that’s the buyer or seller, you need to understand what a home appraisal is. A home appraisal estimates your property’s value and is conducted by a licensed or certified contractor experienced in real estate matters. He inspects your home to evaluate its value.

The value is based on factors like recent sales of such homes in your area, location, social amenities, location, and the property’s structural condition.

The appraiser also takes note of the things that can affect your home’s value. For instance, if your home has a Jacuzzi and they aren’t popular in your locale, it might not add any value to your property.

The appraiser will also check any safety code violations and take photographs of your home’s layout. In case you have violated any codes, you may be required to fix them so that the lender approves your loan.

To be safe, ensure the contractor is licensed and works with several lenders. You may not get the correct evaluation if he only works with few lenders.

Home Appraisal vs. Inspection

Both home inspections and appraisals serve different purposes. However, they’re essential in the home buying process. Checks are carried out to determine your property’s condition.

The inspector checks the design of your home and everything in the house, including plumbing, appliances, electrical and mechanical systems, as well as doors, floors, walls, windows, and ceilings.

After checking everything, the inspector gives an unbiased report and repair recommendations. On the other hand, an evaluation is an estimation of your property’s value.

The appraiser checks your home’s condition to evaluate its value and other factors like the local real estate market. Note that the appraiser doesn’t give repair recommendations.

The objective report should include:

Public tax records, public land records, and market sales data to help the appraiser assess the home’s fair market value.

  • An explanation of how the contractor calculated the property’s square footage.
  • A roadmap showing the comparable sales and appraised homes used.
  • Front and back photographs of all the houses compared.
  • Exterior and front photos of the street and home.
  • The exterior sketch of the house.

Who Pays For Home Appraisals, Buyers Or Sellers?

So who actually pays for the home appraisal, buyer or seller? Generally, the buyer pays for home appraisal costs. The appraiser’s cost can be added to the closing fees or paid upfront during the appraisal process.

However, it’s important to note that you can’t order the appraisal even though you are the one paying for the appraisal. It’s the lender who does that as he seeks an accurate evaluation of your property’s value.

The lending institution needs to be confident that the house’s condition it’s loaning you money to buy is good. After all, no lending institution can grant a $300,000 mortgage on a property whose market price is $275,000. Now that you know who pays for home appraisals let’s move on swiftly.

What Is The Cost Of A Home Appraisal?

Appraisals cost about $300 to $500; however, several factors can affect the cost. Also, bigger square footage or a lack of such homes in the area can inflate an appraisal cost.

Here are some of the factors that determine the cost of an appraisal:

Lack of Experienced Appraisers

It’s not uncommon to find many appraisers in densely populated places like rural areas because of the complexity of working on rural appraisals with few sales records. Unfortunately, when many appraisers want to do the job, the cost can be reduced compared to places with fewer appraisers.

Also, suppose the demand for contractors is higher than their availability; it can be challenging to handle the appraisal contingency correctly within the given time because appraisers get support from refinances and new purchases.


If your house is situated in an urban place with a great information source, the appraisal cost can be lower. On the flip side, if you have a large house in a rural area that sits on many acres of land, the cost can increase.

However, bear in mind that the cost differences depend on how long the appraisal will take.

Type of Loan

This is another determinant that can impact the cost of the appraisal. For example, a jumbo loan is ideal for luxury properties located in places with high demand. Since the mortgage is higher, the cost is likely to scale up.

Type of Home

The type of property you plan to sell will also impact the cost. For instance, you should expect to pay a higher valuation price if you intend to buy a lakefront home as it is usually complex.

Additionally, commercial properties require a lot of time to complete the appraisal process, making the cost more expensive than residential properties.

How Long Do Appraisals Take?

Typically, a home’s evaluation can take a few or fewer hours. However, a ‘drive-by’ analysis can take less time. For most home appraisals, the turnaround time should not take longer than seven business days.

That said, it’s crucial to note that the waiting period can be longer for a busy market. Once the loan has been approved, the appraiser will be required to hand over the appraisal report (final documents) to the lending institution.

What To Do If Your Home Appraisal Does Not Match The Sale Price

A low appraisal should be the last thing to deal with when selling your property. The appraiser may not understand your reasons for asking for a higher price. Fortunately, there are things you can do to get a favorable appraisal, including:

Increasing Your Down Payment

If you want to get a good deal, consider increasing your down payment to the lending institution in a low appraisal. It’s crucial to hike your down payment since a low appraisal can impact your property’s loan.

Doing this will help you reduce your loan and still get approved without paying mortgage insurance (a monthly payment that every borrower should pay when the down payment is below 20% – the buying price.

This is great, especially if you choose to reduce the sale price. Alternatively, you can use the price difference and increase your down payment. In turn, this will reduce your long-term interest, mortgage insurance, and monthly principal.

Disputing the Home Appraisal Outcome

Appraisals are not the same, and different factors are likely to be omitted or miscalculated and result in a low appraisal. When this happens, you can opt to dispute the final price.

You can also reach out to a realtor and ask him to present the correct data to the lending institution to rectify the low appraisal figure. In case the institution approves the dispute, it will be scrutinized further by the institution’s mortgage appraisal department to determine if it can support your proposed sale price.

Requesting the Seller to Reduce the Sale Price

Instead of backing out when the appraisal is low, you can ask the seller to reduce the sale price, especially if you still want to purchase the property.

Since it doesn’t hurt to ask, you may be surprised that the seller would be happy to grant your request. However, be sure to involve the lender in case of any price reductions due to a low appraisal.

What Sellers Should Know

Sellers need to understand who pays for home appraisals to speed up the process. If a low home appraisal is accurate, you may have to reduce your property’s price to sell it. Waiting for a cash buyer that doesn’t require an appraisal may not get you a higher price.

Again, if your locale has recently experienced some distressed sales, you may need to reduce your property’s appraisal cost.

The good thing is that you can still persuade the appraiser that your property is worth a lot if you feel other short sales and foreclosures have reduced its value in your area. However, ensure your property’s condition is better than that of nearby homes.

What Buyers Should Know

Like sellers, buyers should also understand who pays for home appraisals to avoid derailing the transaction. If the appraisal is below the market value, the transaction will drag, and if it’s above or at the market value, it will proceed.

If the transaction doesn’t push through, you can lower the appraisal and then persuade the seller to reduce the price because the lender won’t give you more than what your property cost.

Since a seller may refuse to lower the price due to a lower appraisal, get another appraisal from a different contractor because appraisers can collect inaccurate data.

Contact Us To Learn More

We understand an appraisal assessment can be intimidating. If you still want more information on who pays for home appraisals, call us at 1-801-882-2292 to schedule an appointment or request a free quote today!

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