In a financed home purchase, the lender orders the home appraisal. You pay for it, but the lender chooses the appraiser and controls the timing because federal law requires an independent valuation of the property before the loan can close. In a cash deal, no one is required to order an appraisal, so the buyer typically hires one directly. Sellers can also order a pre-listing appraisal on their own, though a buyer’s lender won’t accept it for underwriting.
Why the Lender Is the One Ordering It
The house is the lender’s collateral. If you default, the bank needs to know the property can be sold for enough to recover what it lent. That’s why the appraisal decision is taken out of the buyer’s and seller’s hands and given to the institution putting up the money.
Federal law backs this up. A creditor can’t extend a higher-priced mortgage without first obtaining a written appraisal performed by a state-certified or licensed appraiser who has physically visited the interior of the property.1Office of the Law Revision Counsel. 15 U.S.C. 1639h – Property Appraisal Requirements Regulation Z prohibits closing on those loans until the appraisal is complete.2eCFR. 12 CFR 1026.35 – Requirements for Higher-Priced Mortgage Loans For conventional loans that don’t meet the higher-priced threshold, federal banking rules still require the institution to obtain either a full appraisal or an appropriate evaluation before extending credit.3eCFR. 12 CFR 34.43 – Appraisals Required; Transactions Requiring a State Certified or Licensed Appraiser
The Appraiser Independence Buffer
Federal law makes it illegal for anyone in a mortgage transaction to pressure, coerce, or steer an appraiser toward a particular value.4Office of the Law Revision Counsel. 15 U.S.C. 1639e – Appraisal Independence Requirements A loan officer can’t call an appraiser and tell them the deal needs a certain number to close.
To keep that separation clean, most lenders route appraisal orders through an Appraisal Management Company. The AMC receives the property details, assigns a local appraiser from a rotating panel, handles scheduling with the listing agent or homeowner, and reviews the finished report before sending it to underwriting. Neither you nor the loan officer picks the individual appraiser who shows up. These rules exist because inflated appraisals were a significant contributor to the 2008 housing crisis.
Who Pays for It
Even though the lender orders the appraisal, the buyer pays for it in almost every financed purchase. You’ll see the charge either as an upfront fee at application or as a line item at closing. A typical single-family appraisal runs roughly $300 to $500, with higher fees in remote areas or on unusual properties.
The fee is yours whether the appraisal supports the price, comes in low, or the loan falls apart entirely. In competitive markets some sellers agree to credit the buyer for the appraisal cost as a concession, but that’s a negotiated item, not standard practice.
When the Lender Has to Pay for a Second One
In certain “flip” scenarios, federal rules force the lender to order two appraisals and absorb the cost of one. This applies to higher-priced mortgage loans when the seller acquired the property within the previous 90 days and is reselling at a markup of more than 10 percent, or within 91 to 180 days at a markup exceeding 20 percent. The two appraisals must come from different appraisers, and the lender can only pass through the cost of one to you.5eCFR. 12 CFR 34.203 – Appraisals for Higher-Priced Mortgage Loans
You’re Entitled to a Free Copy
The lender orders the report, but you have a legal right to see it. Under Regulation B, the lender must give you a copy of every appraisal and written valuation connected to your mortgage application. Delivery has to happen promptly after the appraisal is finished, or at least three business days before closing, whichever comes first.6eCFR. 12 CFR 1002.14 – Rules on Providing Appraisals and Other Valuations
You can waive the three-day advance requirement and receive the copy at closing, but the waiver itself has to be signed at least three business days before closing.6eCFR. 12 CFR 1002.14 – Rules on Providing Appraisals and Other Valuations If the loan falls through, the lender still has to send you the appraisal within 30 days of deciding the loan won’t close.7eCFR. 12 CFR Part 1002 – Equal Credit Opportunity Act (Regulation B) If a lender tells you the report belongs to them, that’s wrong. You paid for it, and federal law guarantees you a copy.
When No One Orders a Full Appraisal
Not every mortgage triggers a traditional appraisal. Two situations can eliminate it.
For certain residential transactions below $400,000, federal banking regulators allow lenders to use a less formal property evaluation in place of a full appraisal by a licensed appraiser.8FDIC. New Appraisal Threshold for Residential Real Estate Loans This mainly applies to portfolio loans held by banks and credit unions rather than loans sold to Fannie Mae or Freddie Mac.
Fannie Mae and Freddie Mac also offer appraisal alternatives on qualifying purchases. Fannie Mae’s Value Acceptance program, previously called appraisal waivers, allows eligible purchase loans on primary residences and second homes to close without a traditional appraisal at loan-to-value ratios up to 90 percent.9Fannie Mae. Fannie Mae Announces Changes to Appraisal Alternatives Requirements Whether you’re offered a waiver depends on the property type, your credit profile, and the data available on the home. If a waiver is offered, your lender can accept it and skip the appraisal, saving you the fee. You can still request an appraisal anyway if you want independent confirmation of value.
Cash Purchases: You Order It Yourself
With no lender in the deal, no one is required to order an appraisal. The decision is voluntary. Most cash buyers get one anyway, because wiring several hundred thousand dollars without independent confirmation of value is a risk most people don’t want to take. In this case you as the buyer hire and pay the appraiser directly, and you also choose them.
Pre-Listing Appraisals: Ordered by the Seller
Sellers sometimes order an appraisal before listing. A pre-listing appraisal helps set a realistic asking price, flags condition issues that could drag down value, and gives the seller data to point to if a buyer’s lender-ordered appraisal later comes in lower. The seller picks the appraiser, pays the fee, and decides whether to share the results.
One boundary to keep in mind: a buyer’s lender won’t accept a seller-ordered appraisal for underwriting. The lender will always order its own, regardless of what the seller already has in hand.
Why It Matters When the Appraisal Comes In Low
A low appraisal is one of the most common reasons deals fall apart, and this is where the ordering question turns practical. Because the lender ordered it and controls the process, neither you nor the seller can simply order a friendlier one. Your options are limited to these:
- Ask the seller to reduce the price to match the appraised value. This is the cleanest path because it keeps the loan amount intact.
- Bring extra cash to closing to cover the gap between the appraised value and the contract price. The lender will only lend against the appraised value.
- Request a reconsideration of value. Federal interagency guidance provides a formal process for borrowers to submit evidence, such as comparable sales the appraiser may have missed, which the lender then forwards to the appraiser. You can only do this once per appraisal, and it has to happen before the loan closes. The appraiser must respond to your evidence but isn’t required to change the value.
- Walk away, if your contract includes an appraisal contingency. Depending on the contract, you may recover your earnest money deposit.
VA and FHA buyers have an extra layer of protection built into the contract. Every VA purchase contract must include a VA escape clause guaranteeing that the buyer will not lose earnest money or otherwise be obligated to complete the purchase if the VA’s appraised value comes in below the contract price.10VA Home Loans. VA Escape Clause11eCFR. 38 CFR 36.4303 – Reporting Requirements FHA contracts carry a similar amendatory clause. In both cases, you can still choose to proceed at the higher price if you want to.