What is a home appraisal and why is it required?

A home appraisal is an independent assessment of a property's market value conducted by a licensed appraiser. Lenders require appraisals to ensure they are not lending more than the property is worth. The appraiser evaluates the home's condition, size, location, and recent comparable sales. If the appraised value comes in below the purchase price, you can negotiate a lower price with the seller, make up the difference in cash, or walk away if you have an appraisal contingency. Appraisals typically cost $400–$700 for a residential property and are ordered by the lender but paid by the borrower.