How Appraisals Work (and Why They Matter More Than You Think)

One of the most misunderstood parts of the home buying or selling process is the appraisal. It usually happens quietly in the background, but it plays a big role in whether your deal closes smoothly—or hits a serious bump in the road.

So what actually happens during an appraisal? And why does it matter so much?

Let’s break it down.

When you’re buying a home with a loan, the lender wants to make sure the property is worth what you’re paying for it. It’s their way of protecting themselves before handing over a few hundred thousand dollars. That’s where the appraisal comes in.

An appraiser—typically a third-party professional hired by the lender—visits the home and does a full analysis. They don’t just glance at the finishes or look at the square footage. They’re trained to evaluate the property’s condition, location, features, and how it compares to similar homes recently sold nearby.

Even if you’ve offered $300,000 for a home, the lender wants to know: Is this house actually worth $300,000?

If the appraisal comes in at or above the agreed purchase price, great. You move forward. But if it comes in below the contract price, that’s when things get tricky.

This is where a lot of people panic—but there are usually options.

Maybe the buyer brings more cash to cover the gap between the appraisal and the contract price. Maybe the seller agrees to reduce the price. Or maybe both sides meet in the middle. It depends on the situation and how motivated everyone is to make it work.

I’ve seen it go all kinds of ways—and the key is having an agent who knows how to navigate that conversation. You don’t want to make a snap decision or walk away from a deal that could still work out with a little creativity.

Appraisals also show up when you’re selling, especially if your buyer is using a conventional, FHA, or VA loan. Even if you’ve done all the prep work—staging, cleaning, pricing it right—your buyer’s loan still depends on that number coming back where it needs to.

The frustrating part? Appraisals can be unpredictable. Different appraisers may value the same home slightly differently, depending on what comps they pull and how they interpret the market. That’s why, when I list a home, I try to meet the appraiser with information: recent sales, upgrades the seller made, and anything else that could support the price.

It’s not about trying to influence them—it’s about giving them the full picture.

At the end of the day, the appraisal is just one piece of the puzzle. But it’s an important one. It can affect your financing, your timeline, and your negotiations.

If you’re planning to buy or sell soon, knowing how appraisals work—and how to respond if things don’t go as expected—can save you a lot of stress.

And the good news? You don’t have to figure it all out alone.

Have questions about appraisals or the home buying process? Let’s talk. I’ll walk you through what to expect and help you stay one step ahead, every step of the way.