It costs money to have a professional appraiser evaluate your property and tell you how much it’s worth. While the buyer is generally the one to cover appraisal fees in a property sale, in some scenarios a homeowner or home seller will choose to order their own house appraisal, sometimes as an aid in pricing a unique property or to generate ideas for upgrades that would add value. In that case, you’ll want to be prepared to pay the associated costs.
“Almost anywhere in the country, the minimum amount necessary for a credible home appraisal is likely going to be somewhere between $450-$550,” says Mike Ford, a Southern California-based general certified real estate appraiser since 1986.
Those appraisal fees account for:
- The expertise of the appraiser, who has been licensed, trained, and insured in the profession
- The appraiser’s visual inspection of the home
- The appraiser’s analysis of recent comparable sales (or application of other appraisal methods, such as the cost approach or income method)
- The appraisal report, summarizing how the appraiser arrived at a true, unbiased opinion of value
- Details like your property’s size, location, and unique characteristics
However, your appraisal could cost more or less depending on where you live, the type of loan involved, and appraiser availability in your area. Here we’ll give a quick refresher on what a home appraisal entails and how the cost of one can be influenced by a number of factors.
What’s the purpose of a home appraisal?
According to the National Association of Realtors (NAR), the purpose of a home appraisal is to offer an “independent and impartial analysis of real property.” In a real estate transaction, the buyer’s lender will require that the appraisal takes place after you have accepted an offer, and typically within a week after the home inspection is completed.
During the process, an objective, licensed appraiser will look at a range of factors — including the property’s location, condition, square footage, lot, age, zoning classification, car storage areas, availability of public utilities, and any improvements that have been made — to assess the market value of the home. They will also typically evaluate comparable sales in the area.
The appraisal is a “make or break” component of any real estate transaction, and is designed primarily to protect the buyer and the lender. The assessed market value must be at or above the offer amount — if it falls below, the deal could be in jeopardy. In fact, according to a January 2020 NAR survey, “home appraisal issues” are responsible for 18% of delayed real estate contracts.
What influences the cost of a home appraisal?
Just as no two homes are alike, every appraisal will be different — and the costs will vary as well. Your real estate agent can help you determine what an appraisal will cost for your home. Here are a few reports, estimates, and cost ranges from the field:
- According to Bankrate, “A typical, single-family home appraisal” will cost between $300 to $450, while a home that is larger in size or is located in a big city can cost between $500 and $800.
- Rachel Massey, a certified residential appraiser with Massey and Associates Valuation Services in Ann Arbor, Michigan, says her clients typically spend between $400 and $1,000.
- Mason Spurgeon, owner of Spurgeon Appraisers, which services Missouri, Illinois, and Iowa, says a typical home appraisal costs between $400 and $500, but could be as high as $1,500.
- Aaron Brunette, a top-selling real estate agent in Eau Claire, Wisconsin, typically sees a home appraisal price of between $350 and $450 for conventional term loans, although the cost can be higher for VA and FHA loans.
There are many factors that can impact the cost of a home appraisal:
The type of home you are selling will affect the appraisal cost. “For example, lakefront properties are almost always complex, and a consumer should expect to pay more for this type of valuation than that of a house in a subdivision,” explains Massey. Commercial properties are also more involved, and thus more expensive to appraise, than residential homes.
Urban versus rural setting:
“If a property is located in a city with a good source of solid data through the local MLS, the appraisal would probably be at the lower end of the price range,” says Spurgeon. “On the other hand, if the property is a large, ornate home in a very rural area on several acres of ground, this would probably be closer to the upper end of the fee range. These price differences are based on the time it takes to complete the appraisals.”
Lack of qualified appraisers:
There are likely to be more appraisers available in heavily populated areas as opposed to rural areas. As Spurgeon explains, this is due to the complexity and difficulty of completing a rural appraisal with limited sales data. When more appraisers are clamoring for jobs, the price is likely to be lower than in areas where there are fewer available.
Brunette points out that there is currently a high demand for appraisers compared to the availability. That means it can be a challenge to satisfy the appraisal contingency within the timeline for the offer to purchase, as appraisers are backed up with new purchases and refinances.
This type of loan is typically made for larger, luxury homes that are located in high-demand areas. Because the mortgage limits are higher than conventional loans, the appraisal costs may also scale higher.
Why would a seller pay for their own home appraisal?
In a vast majority of home sales, the borrower pays for the appraisal, with the goal of ensuring that the market value is at least equivalent to the amount of the offer. The lender might cover the cost upfront, but will then typically pass along the expense to the borrower at closing.
But in some scenarios, the seller might decide to order their own appraisal prior to listing or inspection:
To help with pricing and investment decisions:
Massey sees many sellers using the appraisal as another point of reference to help them make informed decisions about pricing.
“I always recommend that sellers consult their Realtor for their price opinion, but it can also be helpful to obtain an appraisal if there are any looming questions,” she says.
“Both an appraisal and an agent’s opinion of the sales price are beneficial to the seller, and if possible, both should be obtained.”
The agent will base much of their opinion on current competition — which makes sense, as the property needs to compete with other available properties to obtain the best price. The appraiser rounds that out with data from closed sales, including historic market activity and trends.
To get ideas for renovations and improvements:
The appraisal can provide valuable information and insights that can help the seller identify opportunities for upgrades that could increase the home’s value and, ultimately, the sale price.
To sell to a family member:
An appraisal will help to protect the best interests of both the buyer and the seller and ensure that everyone is being treated fairly. Spurgeon points out that it also eliminates any disagreements with other family members who weren’t involved in the transaction.
To assist with a property inheritance:
If you inherited a home, Spurgeon recommends getting an appraisal. “This will enable you to raise your tax base, so when you sell the home, you won’t have to pay taxes on the capital gains from when the deceased person purchased the property,” he explains. “This can save you thousands.”
What does an appraiser do?
To a seller, it might seem like the appraiser primarily walks around the house, makes a bunch of notes, and takes some measurements. But as Spurgeon points out, you only see about 10% of the appraisal process — the part that occurs during the inspection. But there is plenty of behind-the-scenes work that happens after the appraiser leaves the property.
“The remaining 90% of the appraisal happens off-site, and consists of traveling, conducting courthouse research for both the subject property and comparable properties, generating the physical report, and analyzing the sales data,” he explains.
Data is the cornerstone of a thorough, quality appraisal — the majority of the fee paid to an appraiser goes toward market research and data collection/analysis.
And you get what you pay for when it comes to ordering an appraisal. Spurgeon has found that lower-cost appraisals tend to have older sales comparables that have not been properly verified or confirmed. “Many times, the fee can be directly correlated with the quality of the appraisal,” he notes.
Massey recommends seeking recommendations from your agent or other sellers to find an appraiser who is familiar with properties like yours and can answer any questions you might have.
“Don’t just hire based on the cheapest and fastest, for the simple reason that an appraiser who does not know how to value their own time and expertise may well not be the best to handle the value on the real property,” she says.
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