Appraisal and final walkthrough: the last two checkpoints

What an appraisal is, and why your lender requires one

An appraisal is an independent estimate of a home’s fair market value, performed by a state-licensed appraiser. The lender orders the appraisal (you pay for it, $500–$700 typically), and the appraiser is required to be independent — neither side picks them.

The lender will only loan you up to a percentage of the lower of:

• The appraised value, or
• The purchase price.

That percentage is your loan-to-value (LTV) — 95% for many Conventional and FHA loans, 100% for VA. So if a home is under contract at $400,000 and appraises at $385,000, the lender treats $385,000 as the value. Your loan amount drops accordingly. You either bring more cash, renegotiate, or walk away (if you have an appraisal contingency).

How the appraisal actually happens

• 1. Lender orders the appraisal

  Lender uses an Appraisal Management Company (AMC) so the appraiser stays independent. Typically ordered within 3–5 days of contract.

• 2. Appraiser visits the home

  20–60 minutes. Measures square footage, photographs every room, takes notes on condition, finishes, layout, and exterior. The seller (and sometimes their agent) is usually present.

• 3. Appraiser pulls "comps"

  Three to six recently-closed sales of similar homes within ~1 mile. Adjustments are made for differences (square footage, garage spaces, lot size, finished basement, condition).

• 4. Report delivered to lender

  Typically 5–10 business days after the visit. PDF report with the appraised value, comps used, and condition notes. The buyer’s lender shares it with you within 3 days.

Three appraisal outcomes

• Appraises at or above purchase price

  The most common outcome. The deal continues. If it appraises higher than your purchase price, that’s instant equity — but doesn’t change your loan amount.

• Appraises low (below purchase price)

  Three options: (1) bring extra cash to cover the gap, (2) renegotiate the purchase price down with the seller, (3) walk away with earnest money returned (if you have an appraisal contingency).

• Appraises with conditions

  Common on FHA/VA loans where the appraiser flags safety or habitability issues (peeling paint on a pre-1978 home, missing handrails, broken windows). Seller must fix and the appraiser re-inspects before closing.

If the appraisal comes in low

Don’t panic — low appraisals happen. Here’s the playbook.

1. Get the report. Read the comps. Did the appraiser pick the wrong houses? A different neighborhood? Older sales when the market has moved?
2. Talk to your loan officer about a "reconsideration of value" (ROV). If you can find better comps the appraiser missed, the lender can submit them for reconsideration. Success rate is modest but it’s free to ask.
3. Ask the seller to drop the price to the appraised value. In a buyer-favorable market, often accepted. In a seller-favorable market, expect resistance.
4. Meet in the middle. Seller drops some, you bring some extra cash. A common compromise.
5. Bring all the gap in cash. Only if you have the cash and you’re still confident the home is worth it. The extra cash above appraised value gives you immediate negative equity, so think hard.
6. Walk away. Use your appraisal contingency. Earnest money returns. Move on to the next home.

The final walkthrough

The final walkthrough happens 24–48 hours before closing. You and your agent walk the home one more time to confirm:

• The home is in the same condition as when you went under contract
• Any agreed-upon repairs were completed
• All items the seller agreed to leave (appliances, fixtures, etc.) are still there
• The home is empty of seller belongings (unless you negotiated a leaseback)
• All major systems still work (run faucets, flush toilets, turn on HVAC, test outlets)

The walkthrough checklist

• Run every faucet

  Hot and cold. Pressure normal? No leaks under the sink? Drains flowing?

• Flush every toilet

  They should fill normally and stop. Listen for running water.

• Test the HVAC

  Turn on heat, then cooling. Air should come out at every vent. Should reach the thermostat target.

• Test outlets and switches

  Bring a phone charger. Plug in a few in each room. Flip every switch.

• Confirm appliances stayed

  Refrigerator, washer/dryer, etc. — whatever was specified in the contract. Open the dishwasher (sometimes they take it and replace with a different unit).

• Check all rooms for damage

  Movers leave dings. Walls behind furniture were unseen on tour. Look for new dents, scrapes, or damage.

• Open the garage door

  Manually and with the opener. Test the safety sensors with a foot.

• Look at the exterior

  Yard cleared of debris? Gutters still attached? No new damage from the move-out?

• Verify repairs

  If the seller agreed to repairs after inspection, get receipts and confirm the work was done. A walk-through is your last chance to catch shoddy or skipped repairs.

If something’s wrong at the walkthrough

You have a few choices, and they all involve your agent talking to the seller’s agent immediately.

• Minor issues — close anyway with a hold-back

  Title can hold a portion of seller proceeds in escrow until repairs are completed. Common for items the seller can fix in days.

• Major issues — delay closing

  A failed AC, water damage from a recent storm, or missing appliances can push closing by days. Better to slow down than close on a broken home.

• Major undisclosed damage — back out

  If something went substantively wrong since the inspection (a fire, a flood, a contractor accident), you have legal grounds to terminate. Contact a real estate attorney immediately.

Common questions