Mortgage glossary
Appraisal
Definition: An appraisal is an independent, licensed professional's opinion of a property's market value, ordered by the lender to confirm the home is worth enough to support the loan amount.
The appraiser inspects the home and compares it with recent nearby sales, adjusting for size, condition, upgrades and location. The lender uses the lower of the appraised value or the purchase price to calculate the loan-to-value ratio. FHA, VA and USDA appraisals also check certain minimum property standards.
If the appraisal comes in below the contract price, buyers typically renegotiate, bring more cash, challenge the value with better comparable sales, or use contract protections to exit. In Austin's shifting market, low appraisals on fast moving listings are worth planning for before you write an offer.
Related terms
Reviewed by Kyle Richardson, NMLS #863464. General information, not advice for your specific situation. All glossary terms
Ready when you are.
Start your full application in about 10 minutes, or call and talk to a real person on the team.
Not ready to apply? See your options in 60 seconds