“Appraised value” is the impartial, professional estimate of a property’s worth. Lenders use it to set loan amounts, buyers reference it to avoid overpaying and sellers monitor it when pricing their homes.
Whether you’re a first-time buyer securing a mortgage, a seller setting list price, or an investor evaluating rental yields, understanding appraised value ensures financially sound decisions.
An appraised value is the estimated market worth of real estate as determined by a licensed appraiser. It reflects condition, location, size, features and recent comparable sales (“comps”).
Appraisals protect lenders by verifying collateral value, guide buyers during negotiations and help sellers justify their asking price based on objective data.
An appraisal isn’t the same as the sale price. A home can sell above, at or below its appraised value. If it appraises lower than the contract price, parties often renegotiate.
Appraisers analyze recent sales of similar homes in the neighborhood, adjusting for size, age, amenities and market trends to arrive at a value.
This method calculates what it would cost to rebuild the property today, subtracts depreciation, then adds land value—useful for new or unique homes.
Investors rely on projected rental income and expenses. Appraisers capitalize net operating income at a market rate to estimate value.
Quality of schools, proximity to amenities, structural condition and recent renovations or energy-efficient upgrades can raise or lower the appraised figure.
Market value is the price a willing buyer and seller agree upon in an open transaction, influenced by demand and negotiation rather than strict appraisal rules.
Assessed value is set by local tax assessors using standardized schedules and formulas. It’s often lower than market or appraised value and determines property tax bills.
Each value serves a different purpose: appraised for lending, market for transactions, assessed for taxation. Timing, methodology and intended use drive divergences.
Lenders calculate LTV by dividing loan amount by appraised value. A lower appraisal can mean higher down payment or loan denial if LTV exceeds limits.
Many contracts include an appraisal contingency, allowing buyers to renegotiate or exit if the appraisal falls short of the agreed price.
Sellers may price just below expected appraised value to encourage offers, share comps with appraisers or invest in minor upgrades to hit target numbers.
Refinancing lenders require a fresh appraisal to determine equity and set interest rates. HELOC limits hinge on the appraised figure as well.
If you spot errors in the report—missed upgrades, wrong square footage or outdated comps—you can request a reconsideration through your lender.
A second opinion can confirm value or uncover a higher figure, but it adds expense and doesn’t guarantee a different result.
Minor repairs, fresh paint, landscaping and professional staging can enhance perceived condition and justify higher comparables in the report.
Always review your report, prepare documentation ahead of time, and understand your contract’s appraisal clause to navigate disputes effectively.
Typically, buyers order and pay for the appraisal during mortgage application. The fee is due upfront and is non-refundable.
Appraisal fees range from $300 to $600 on average. They’re usually non-refundable even if the loan doesn’t close.
Lenders accept appraisals 90–120 days old. After that, you may need an update or new appraisal to reflect current market conditions.
Not directly. Property taxes are based on assessed value set by tax authorities, which may not move in lockstep with appraised figures.
Yes. Document improvements and provide before-and-after photos or receipts so appraisers can account for added value.
Appraised value influences financing, negotiations and tax planning. Knowing how it’s determined empowers smarter real estate decisions.
Prepare a packet of comps and upgrade documentation, tidy the property, and communicate clearly with your agent and lender.
Explore related terms in our glossary, use online calculators for LTV estimates or consult a licensed appraiser for tailored advice.
