A home appraisal might be one of the least talked about—but most critical—parts of a real estate deal. Whether you're buying your first home or selling one you've owned for years, the appraised value can shape everything from your financing to your final sale price.
So what exactly is a home appraisal? And what should you do if the number isn’t what you expected?
Let’s break it down.
1. What Is a Home Appraisal? A home appraisal is an independent, third-party assessment of a property’s market value. Lenders require them to ensure they’re not lending more than a home is worth. The appraiser is licensed, impartial, and uses a specific set of criteria to evaluate your home—like size, condition, location, and comparable sales ("comps") in the area.
Think of it as the bank’s reality check before handing over hundreds of thousands of dollars.
2. Why Do Appraisals Matter? For buyers: If the appraisal comes in below your offer price, your lender may only approve a mortgage based on the appraised value—not the offer. That means you’d need to make up the difference out-of-pocket or renegotiate.
For sellers: A low appraisal can stall your sale or force a price drop. Even if the buyer loves your home, their financing may fall through unless you adjust the price or they bring more cash.
3. How Are Appraisals Calculated? Appraisers review:
-
Recent comparable home sales within a 1-mile radius (typically 3–6 comps)
-
Interior/exterior condition
-
Square footage, number of beds/baths
-
Upgrades and renovations
-
Market trends in the neighborhood
In Utah, appraisers also consider elevation and slope, proximity to major roads or schools, and even seasonal factors like winter curb appeal.
4. What Happens When an Appraisal Is Low? This is known as an “appraisal gap.” It’s more common in hot markets when buyers offer aggressively above asking.
If a home is under contract at $525,000 but appraises at $500,000, there’s a $25,000 gap. Options include:
-
Buyer bringing the difference in cash
-
Seller lowering the price
-
Meeting in the middle
-
Challenging the appraisal with comps
In many cases, a skilled agent can identify better comps and push for a second opinion.
5. How to Prepare for an Appraisal For sellers: Clean and prep your home like you would for a showing. Share a list of upgrades, new appliances, or systems with your agent to pass along to the appraiser. Make sure your agent is present (or available) to point out key selling points.
For buyers: Talk to your lender and agent about how appraisal gaps are handled in your contract. Know your numbers and comfort zone if one comes up.
Final Thought Appraisals aren’t perfect—but they’re a key checkpoint that can affect everyone in the transaction. Whether you're navigating a hot market or buying in a stable one, understanding how appraisals work gives you leverage and peace of mind.
If you're prepping to buy or sell in the Salt Lake market, let’s talk strategy. I help clients navigate every detail—including appraisal surprises—with confidence.
