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Whether you're buying, selling or refinancing, the home appraisal is an important part of the process. It helps determine your property's value and can influence everything from loan approvals to final negotiations. Let's take a closer look at how an appraisal works, the timeline involved and what happens next.
What Is a Home Appraisal?
A home appraisal is a professional, unbiased estimate of a property's market value, usually required when a home is being bought, sold or refinanced through a mortgage. Lenders use appraisals to help ensure the loan amount aligns with the property's true market value, protecting both the buyer and the lender.
Appraisals are conducted by licensed or certified specialists who understand the local market and factors that impact a property's market value. An appraiser's role is to provide an objective report that considers the home's indoor and outdoor condition and features, along with external factors such as recent sales of similar homes, neighborhood trends and broader market conditions.
The appraisal is typically ordered by a lender shortly after a buyer submits an accepted purchase offer and a completed mortgage application. This is usually within the first week or two of the loan process. Once finished, the appraisal report is shared with the lender and the borrower.
How Long Does an Appraisal Take?
The full appraisal process typically takes about seven to 10 days from start to finish.
The appraiser's on-site visit usually takes one to two hours. After this initial assessment, they will review market data, compare similar home sales and compile a detailed report to support the final valuation.
When the buyer receives the appraisal report depends on factors like the appraiser's workload and the complexity of the property.
After the Appraisal: Common Scenarios
Once the appraisal is complete and the report is submitted, buyers and sellers will move into the next phase of the transaction. What happens next largely depends on how the appraised value compares to the agreed purchase price.
The Appraisal Matches or Exceeds the Sale Price
This is the ideal outcome for both the buyer and seller. It means the home is valued at or above the price in the purchase contract. In this case:
- The lender is confident the property supports the loan amount
- The mortgage moves into underwriting, where all financial documents, income, credit and now the appraisal are reviewed together
- The buyer proceeds toward final loan approval and closing
- The seller gets closer to finalizing the sale
The Appraisal Comes in Lower Than the Sale Price
A low appraisal can create a financing gap, as lenders typically will not finance more than the appraised value. Below are some ways buyers and sellers may respond in this situation.
Buyers may:
- Negotiate a lower purchase price to align with the appraisal
- Pay the difference in cash if financially feasible
- Explore the option to withdraw, if permitted by financing or appraisal contingency
Sellers may:
- Agree to renegotiate the sale price
- Request a reconsideration of value (ROV) if the appraisal relied on distressed or outdated comps. Note that this is a complex process that involves substantial documentation from the seller to prove the case, and only a small percentage of ROVs are actually reviewed by a lender.
- Reevaluate the original listing price to better reflect market conditions
The Appraisal Comes Back "Subject-To"
Sometimes the appraiser will come back with requirements for certain repairs to be made prior to the appraisal being completed. Once those repairs are made, the final review will be completed by the appraiser.
Is a Home Appraisal Required When Refinancing?
Most refinance loans will require a home appraisal. However, some government programs, such as an FHA Streamline Refinance or a VA IRRRL (also called a VA Streamline Refinance), typically waive the appraisal as long as specific criteria are met.
Like a home purchase appraisal, a refinance appraisal typically takes place within the first one to two weeks after you submit your refinance application. The difference? While the outcomes may feel different with the purchase appraisal establishing whether the contracted price is something the lender is willing to finance, and the refinance appraisal generally evaluating how much equity is owned in the home, ultimately there is no difference in how an appraiser comes to the valuation for a home — including the comparison to other recent home sales within a certain radius to measure market value, and a standard evaluation of the home's current condition. Whether the homeowner is refinancing to borrow cash against the equity in the home, or someone is simply financing the purchase of a home, the valuation validates the home as appropriate collateral for the determined loan amount.
After the Appraisal FAQs
How Long Does Underwriting Take After Appraisal?
Once the appraisal is completed and reviewed, your loan file transitions into underwriting. This step typically begins within a day or two of the appraisal review. Underwriting itself can take a few days to a couple of weeks, depending on factors like:
- The complexity of your financial profile
- Review of the appraisal by the underwriter
- Whether additional documents or clarifications are needed
- The type of loan (e.g., FHA, VA and USDA loans may require extra checks)
How Long After Appraisal to Close?
Borrowers can typically expect a 15 to 30-day window between the completion of the appraisal and the closing. This includes time for underwriting, any follow-up documentation, final loan approval and scheduling the closing appointment. In some cases, especially with well-prepared applications or streamlined loans, closing may happen faster, sometimes in as little as two weeks.
Appraisals to Closing: You're Nearly There
The home appraisal marks a key milestone in the mortgage process. If the appraisal confirms the home's value, you're well-positioned to move into the final phase before closing and move-in day. To help keep things on track, stay connected with your lender, respond promptly to any underwriter requests and continue practicing strong financial habits.
Ready to apply for a home purchase loan or refinance? Contact a Pennymac Loan Expert today. We're here to guide you through each step — from pre-approval to application to appraisal to closing.
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Meet Our Contributing Editors
Bradley Thompson and Afton Lambert are Contributing Editors for Pennymac’s consumer content and are exemplary leaders within the mortgage industry space. Both experts take pride in helping our customers achieve and sustain their aspirations of home.
For over 13 years, Bradley has achieved success as a high performer in various leadership roles including consumer direct sales and mortgage fulfillment positions.
With over 10 years of mortgage experience, Afton started her career as a top performing Loan Officer, before transitioning into her leadership role, where she has recruited, hired and trained Loan Officers.
