Why do appraisals come in at sales price?
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If you’re buying a home or selling one, you might notice that the home appraisal often matches the sales price. It’s not just a coincidence, it’s a result of several factors working together in the real estate world.
An appraisal aids in buying your prospective home at its accurate market value. Moreover, it influences both the selling price and the mortgage amount. But do you wonder if the appraisal value is correct? And, why do appraisals come in at sales price in most cases? Let’s find out.
What is a home appraisal?
A home appraisal is a way to figure out a property’s value. Simply put, a home appraisal is an unbiased estimate of what a home is worth. Mortgage lenders require appraisals to ensure that the loan amount aligns with the property value. It’s their way of protecting their investment.
A licensed appraiser determines a home’s value. They are trained and qualified to assess the value of an asset, often to determine its market or fair value.
Professional appraisers typically look at factors such as the size of the home, its square footage, its condition, and how it compares to other comparable homes recently sold in the area.
An appraisal also helps a lender decide how much they can loan you to buy the property. For instance, mortgage lenders require an appraisal to make sure they aren’t lending you more money than the house is actually worth.
It’s also important to know that an appraisal is different from a home inspection. While an appraisal determines the value of a home, an inspection checks the condition of things such as the roof, foundation, and plumbing.
What does a professional appraiser do?

A licensed appraiser considers various factors to determine the value of the property:
- Property’s location
- Comparable sales in the area, aka neighborhood comps
- The age and condition of the home
- Size of the property
- Significant improvement, such as additions or renovations.
- The total land area or square footage
- The presence of any lead paint, peeling paint, or asbestos in the popcorn ceiling
- The condition of the HVAC system
- Number of bedrooms, bathrooms, windows, and closets
- The garage space
- Whether the basement is finished or not
- Built-in home appliance upgrades
- Presence of an in-ground swimming pool
Read more: Fair Housing Act of 1968
How much does a home appraisal cost?
The home appraisal cost can vary depending on several factors, including the size of the home and market conditions. On average, appraisal fees for a typical single-family home range from $300 to $600. However, if your home is larger or in a high-demand area, the cost can be higher.
Another factor that can affect the cost is whether the loan you’re applying for is through a program like VA loans. VA loans are specific to military service members, veterans, and their families, and they have their own set of appraisal guidelines. With VA loans, the appraisal fees can sometimes be a bit lower because the Department of Veterans Affairs sets maximum limits on how much appraisers can charge.

House appraised value vs. sales price: Do they match?
Home sellers usually want the appraisal value to match their asking price for a smooth real estate transaction. However, the value of a house determined by an appraisal might not be the same as what sellers are asking for.
Keep in mind that mortgage loan lenders use the appraisal value to decide how much they’ll lend to the potential home buyer for the purchase. In case the appraisal falls short vis-à-vis the selling price, it might make closing the deal difficult for both the buyer and seller. For instance, if the appraisal is lower, buyers may ask for a lower price or cancel the sale altogether.
Why do appraisals come in at sales price, often?
In most cases, the selling price reflects what the market is willing to pay for a home. When a buyer and seller agree on a purchase price, they’re essentially establishing the market value. Appraisers use this figure as a starting point when determining the appraised value.
Another reason is that comparable sales play a big role. Appraisers analyze recent sale prices of similar homes in the neighborhood. If several comparable properties recently sold for $400,000 and the subject property is listed and under contract for $400,000, the appraised value of the home will likely fall in line with that figure.
Additionally, the current state of the housing market plays a major role. When interest rates are low, buyer demand tends to increase, which can push home prices higher. In fast-moving markets, buyers sometimes offer more than the asking price to secure a home. Even if a property is priced slightly higher than the sales price of recent comps, the appraiser may still support it if justified by upgrades, location, or limited inventory.
Appraisers know what’s at stake. They are aware that their valuation impacts the buyer, seller, and mortgage lender. If the appraised value falls significantly below the sales price, it could derail the deal, as the loan amount is based on the lower of the appraised value vs sales price. This makes it critical for the appraiser to ensure the valuation is fair yet justifiable.
Furthermore, sometimes, the buyer and seller might renegotiate the purchase price if the initial appraised value comes in lower than expected. Adjustments like this often bring the final price and appraisal into alignment, ensuring the deal moves forward.
Who pays for a home appraisal?
When it comes to who pays for the appraisal, the buyer is usually the one responsible. In most home purchases, the home buyer will cover the cost upfront, although some sellers might agree to pay this as part of the deal. In certain situations, such as with VA loans, the lender might cover some of the appraisal cost, but this isn’t always the case.
So, if you’re planning to buy a home, make sure you budget for the appraisal fees along with your other closing expenses.
Key takeaway
Appraisals are an important step that helps both you and your lender understand how much the home is worth. For buyers, understanding this process helps ensure you’re paying a fair price and securing the right mortgage loan. For sellers, pricing your home correctly from the start can avoid appraisal-related surprises and delays.
Appraisals matching the sales price reflect a well-balanced transaction between the buyer, seller, and lender. By considering factors including comparable sales, market trends, and the listing price, appraisers aim to provide a realistic and justifiable valuation.
As a result, you’ll have some peace of mind knowing that you’re not overpaying for your new home. While the buyer usually pays for the appraisal, it’s always good to clarify this with your lender and factor the cost into your overall budget for closing costs.
The next time you hear someone mention that “the appraisal came in at the sales price,” you’ll know it’s not a random outcome. It’s the result of careful analysis, market dynamics, and a touch of real estate expertise working in harmony!
FAQs
What happens if the appraised value doesn’t match?
While it’s common for the appraisal to match the sales price, there are exceptions. If the appraised value comes in lower:
- The buyer might need to cover the difference between the loan amount and the purchase price.
- The seller may have to lower the sales price.
- The deal could fall through entirely if neither party adjusts.
What happens if the appraisal is higher than what I’m paying for the house?
If the appraisal is higher than the price you’re paying, that’s great news! It means you’re purchasing the house for less than it’s actually worth. Your mortgage won’t change, though, because the loan is based on the agreed purchase price, not the appraised value.
What should I do if the house is appraised lower than the listing price?
If the appraisal comes in lower than the listing price, it doesn’t mean you won’t get the loan. The lender will only offer a loan based on the appraised value. You’ll need to either cover the difference out of pocket or negotiate with the seller to lower the price to the appraised value.
Why does a house appraise for less?
Several factors can lead to a low appraisal, such as a slow housing market, very high home prices, bad or no comps, no home maintenance on the seller’s part, and if the house is a little too improved or expensive for the neighborhood.
What is the Loan-to-Value (LTV) ratio, and why is it important?
The LTV ratio shows how much of the home’s value your loan covers. It’s calculated by dividing the loan amount by the appraised value of the home, then multiplying by 100. For example, if your loan is $130,000 and the home’s value is $150,000, your LTV ratio is 87%. Lenders use this to assess the risk of the loan.
Can I dispute an appraisal if I think it’s inaccurate?
Yes, you can dispute an appraisal if you believe there are mistakes or discrepancies. It’s best to review the appraisal report for errors, particularly in areas such as square footage or comparable home prices. If you find issues, you can request a reconsideration or even a second opinion.
What is an appraisal contingency?
An appraisal contingency is a clause in your purchase agreement that allows you to back out of the deal if the appraisal comes in lower than the sale price and the seller isn’t willing to lower the price. This protects you from overpaying for a home or having to come up with the difference out of pocket.
Can an experienced real estate agent help with appraisal issues?
Yes, hiring a good real estate agent can be very helpful when dealing with appraisal issues. They can assist you with negotiations, help spot potential discrepancies in the appraisal, and advise on the best course of action to ensure you maximize your benefits during the home buying process.
Bottom line
Appraisals aren’t just formalities—they’re a critical part of real estate transactions that help balance fairness and financial security. While it may seem like appraisals just happen to match sales prices, it’s actually a reflection of market dynamics, comparable sale prices, and detailed analysis by a professional appraiser.
When interest rates are stable, buyer activity is strong, and comparable homes support the deal, it’s no surprise that the appraised value of a home aligns with the sales price. For buyers, this means peace of mind that your home loan is backed by real market value. For sellers, it’s a green light that your price is justified.
Whether you’re on the buying or selling side, understanding why appraisals come in at the sales price helps you better navigate negotiations, anticipate financing outcomes, and confidently move forward with your real estate goals.
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