Process
Appraisal
An independent professional estimate of a home's market value, ordered by the lender to confirm the property is worth enough to secure the loan.
What does appraisal mean?
An appraisal protects the lender by confirming the home is worth at least what you're borrowing against it. A licensed appraiser compares the property to recent nearby sales and inspects its condition.
If the appraisal comes in below the purchase price, you must make up the gap in cash, renegotiate, or walk — a real risk in fast-rising Michigan markets where offers outpace comparable sales.
A Michigan example
You agree to pay $300,000 for a Grand Rapids home, but the appraisal comes back at $285,000. Your lender will only lend against the lower figure.
That leaves a $15,000 gap. You can cover it in cash, ask the seller to drop the price, split the difference, or walk if you kept an appraisal contingency.
Common questions
Who pays for the appraisal?
The buyer, usually $500–$700, paid during the loan process. Rural and Upper Peninsula properties with few comparable sales can run higher and take longer to schedule.
Related terms