Who Orders the Appraisal in a Real Estate Transaction?
When buying a home with a mortgage, one of the final steps before closing is the home appraisal. This step often raises questions for buyers and sellers.
The most common question is simple: Who actually orders the appraisal?
In most real estate transactions, the appraisal is ordered by the lender as part of the mortgage approval process.
What Is a Real Estate Appraisal?
A real estate appraisal is a professional opinion of a home’s value prepared by a licensed appraiser. Lenders require an appraisal to confirm the property is worth the amount being financed.
The appraiser evaluates several factors, including:
- Recent comparable home sales
- The home’s condition and upgrades
- Square footage and layout
- Lot size and location
- Local housing market trends
If you want to understand the broader process of purchasing a home, our guide on why using a buyer’s agent matters explains how professionals help protect buyers throughout the transaction.
You can also read the official explanation of appraisals from the Consumer Financial Protection Bureau.
Why the Lender Orders the Appraisal
The lender orders the appraisal because the property serves as collateral for the mortgage loan. If the borrower stops making payments, the lender must be confident the home is worth enough to recover the loan balance.
This is why federal lending guidelines require appraisers to remain independent from buyers, sellers, and real estate agents involved in the deal.
The U.S. Department of Housing and Urban Development provides additional information about appraisal requirements for federally backed mortgage loans.
Who Pays for the Appraisal?
Although the lender orders the appraisal, the buyer usually pays for it as part of the loan closing costs.
The appraisal fee typically ranges between $400 and $700 depending on the property type and complexity. The fee usually appears on the loan estimate provided by your lender early in the financing process.
If you’re preparing to buy a home and want to better understand the full process, our Mantle Realty blog includes guides on inspections, negotiations, financing, and other important steps.
What Happens During the Appraisal?
The appraiser will schedule a visit to the property to evaluate the home and verify its features. During the inspection they may:
- Measure the home’s square footage
- Photograph the interior and exterior
- Evaluate upgrades and overall condition
- Compare the property to recent nearby home sales
After the visit, the appraiser prepares a detailed report estimating the home’s market value.
What Happens if the Appraisal Comes in Low?
If the appraisal value comes in below the agreed purchase price, the lender may reduce the loan amount.
This can lead to several possible outcomes:
- The seller lowers the price
- The buyer brings additional funds to closing
- The buyer and seller renegotiate the contract
- The buyer walks away depending on contract contingencies
This situation is one reason buyers often benefit from professional representation during negotiations. Our team explains this further on our buyer agency page.
Why Appraisals Matter for Buyers and Sellers
Appraisals protect lenders, but they also protect buyers from overpaying for a home.
For sellers, understanding how appraisers determine value can help when pricing a home before listing it for sale. If you’re deciding whether to sell as-is or make repairs first, this guide may help: Should I Sell As-Is or Fix It First?.
If you are thinking about buying or selling and want expert guidance, contact our team here: Mantle Realty.
You can also start browsing available homes anytime using our home search tools.
Category: Home Buying Guides
