Appraisal
Direct definition
An independent, licensed opinion of a property's market value used by the lender.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
An appraiser inspects the property, compares it to recent sales of similar homes, and produces a written report estimating fair market value. Lenders use it to make sure they aren't lending more than the collateral is worth.
Why it matters
A low appraisal can force renegotiation, a larger down payment, or a canceled contract.
Where you may see it
- Appraisal report
- Purchase contract
- Underwriting conditions
A real-world example
Educational and illustrative only
A common misunderstanding
An appraisal is not a home inspection — it doesn't evaluate the condition of systems like plumbing or electrical in detail.
Frequently asked
Who pays for the appraisal?+
Typically the buyer, as part of upfront loan costs.
Can I challenge a low appraisal?+
Yes — through a reconsideration of value with supporting comparable sales.
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- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026