Appraisal fee – definition and meaning

An appraisal fee is a payment made to someone to evaluate how much a home is worth. It is essentially a fee to estimate the value of the property.

As an independent assessment of a property’s value, an appraisal is important for lenders to know how much a home is worth.

If you pay more for a home than its real market value, it takes longer to build equity in the home. Additionally, lenders run a higher risk of not getting back their money if the borrower defaults.

According to, an appraisal fee refers to:

“Charges payable to a qualified appraiser for estimating the market value of a property, as a fixed fee or one based on a percentage of the estimated value.”

AppraisalThe lender (bank) orders and arranges for the appraisal. (Image:

Before the appraisal process, home sellers could sell their property at any price. Sellers would base the property survey price on their own assessment of what they thought it was worth.

Subsequently, home owners would try to maximize their profits by selling their house for the highest possible price.

However, the number of foreclosures and homeowners defaulting skyrocketed. Consequently, the appraisal process became a key component in the home-financing process.

The appraisal process helps protect the interest of banks and home buyers.

Banks won’t lend without an appraisal

Mortgage lenders will only consider offering a loan to buy a home after the completion of an appraisal. In fact, this is not the case only in the rich countries, but across most of the world. Lenders have only one thing that guarantees they can recover the money they lent. That one thing is the property.

If borrowers run into financial problems and lose their home to foreclosure, the lender will have to sell the property.

The money the lender gets from selling the property repays either all or some of the loan. An appraisal helps make sure that the sale recovers the whole loan.

Appraisals help buyers too

Appraisals can function as a consumer protection for buyers. If the appraisal estimates the house’s value higher than the price you are paying, you will benefit immediately. You will benefit because you will have more home equity than you had expected.

However, if it comes in lower, you and the seller must abide by the contract that you negotiated. Only if the contract is contingent on an appraisal will you be able to withdraw the offer.

How much is an appraisal fee?

According to, a typical appraisal fee in the United States will cost between $300 and $400.

Properties that are large, unique or in remote areas usually cost more to appraise.

In the United Kingdom, people refer to a house appraisal as a house survey. However, apart from valuing the property, the chartered surveyor also carefully examines the structure of the property. The surveyor will list what is wrong with the property. Furthermore, the surveyor will estimate how much each their repairs will cost.

A house survey in the UK costs between £500 and £1,500.

The price of an appraisal is also driven by how much demand there is in the market.

Video – What is an Appraisal?

An expert with thirty years of real estate experience answers common questions that home buyers ask regarding appraisals.