MORTGAGE GLOSSARY
What Is an Appraisal?
The short definition
An appraisal is an independent estimate of a home's market value, performed by a licensed appraiser. Lenders require one to confirm the home is worth at least what's being borrowed against it.
Why it matters
If the appraisal comes in at or above the purchase price, the transaction typically proceeds as planned. If it comes in below, it can require renegotiating the price, the buyer covering the difference, or in some cases, canceling the deal — which is why an appraisal contingency matters.
How it's different from an inspection
An appraisal determines value for the lender. A home inspection evaluates the property's condition for the buyer. They're separate processes with separate purposes, often happening around the same time.
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