When to Get a Home Appraisal: 9 Situations That Justify the Cost

A professional home appraisal costs $300-$600. That's not nothing. So when is it actually worth paying for?

Here are the situations where a formal appraisal makes sense—and when cheaper alternatives work just fine.

What Is a Home Appraisal?

A home appraisal is a licensed professional's opinion of your property's market value based on:

• Physical inspection of the property
• Analysis of comparable sales
• Market conditions assessment
• Property condition evaluation
• Written report with methodology

It's more rigorous than a Zillow estimate and more defensible than your neighbor's opinion.

When You MUST Get an Appraisal

Some situations require a formal appraisal—there's no alternative.

1. Buying a Home with a Mortgage

Your lender won't fund a purchase without an appraisal. They need to confirm the home is worth at least what you're paying.

What happens:

• Lender orders appraisal (you pay, typically $400-$550)
• Appraiser inspects property and researches comps
• Report goes to lender
• If appraisal meets or exceeds purchase price, you proceed
• If low, you renegotiate, bring cash, or walk

Your role: You pay for it but don't choose the appraiser—lender requirements post-2008 prevent that conflict of interest.

2. Refinancing Your Mortgage

Refinance lenders need current value to calculate your loan-to-value ratio.

Exception: Some streamline refinances (FHA, VA) don't require new appraisals if you're current on payments.

Exception: Some lenders accept desktop or drive-by appraisals for lower loan amounts or strong credit profiles.

3. Getting a HELOC (Sometimes)

HELOC requirements vary by lender and loan amount:

Likely AVM only:

• Smaller HELOCs (<$100,000)
• Strong credit
• Low combined LTV

Likely full appraisal:

• Larger HELOCs
• Unique properties
• Higher LTV
• Properties that don't match AVM data

Strategy: Apply first. The lender will tell you what they need. No point paying for an appraisal before you know if they'll require one.

When You SHOULD Get an Appraisal

No one's forcing you, but the money is well spent.

4. Divorce Proceedings

When a marriage ends, equitably dividing assets requires knowing what those assets are worth.

Why it matters:

• One spouse keeping the house needs to buy out the other's equity
• Without agreed-upon value, negotiations stall or lawyers bill more
• Courts may require appraisal anyway

Best practice: Both parties agree on one appraiser, or each gets their own and average them.

5. Estate Settlement

When someone passes, their estate needs valuation for:

• Probate proceedings
• Estate tax calculations
• Fair distribution among heirs
• Step-up in basis establishment

Timing matters: Appraisals for estate purposes should reflect value at date of death, not current date if significant time has passed.

6. Challenging Property Tax Assessment

If you believe your assessed value (and therefore property taxes) is too high, an appraisal provides ammunition.

The math:

• Current assessed value: $600,000

• Property tax rate: 1.2%

• Annual taxes: $7,200

• Your appraisal shows: $520,000

• Potential new taxes: $6,240

• Annual savings: $960

If the appraisal costs $450 and you save $960/year, that's a 2.1x first-year return—assuming the appeal succeeds.

Check appeal deadlines first. Miss them and your appraisal is worthless until next year.

7. Major Renovation Planning

Before starting a $100,000 kitchen renovation, know if you'll recoup the cost.

Scenario A:

• Home value: $400,000
• After renovation value: $475,000
• Investment: $100,000
• Net: -$25,000 (you over-improved)

Scenario B:

• Home value: $400,000
• After renovation value: $520,000
• Investment: $100,000
• Net: +$20,000 (good investment)

A pre-renovation appraisal plus the appraiser's estimate of post-renovation value helps you avoid over-improving for your neighborhood.

8. Insurance Coverage Review

Most homeowners have replacement cost coverage, which is different from market value. But understanding both helps ensure you're properly covered.

When it matters:

• Significant appreciation since you bought
• Major renovations or additions
• Unique construction features
• High-value homes where underinsurance risk is significant

Some insurance companies offer their own valuations, but an independent appraisal gives you negotiating power if you disagree.

9. PMI Removal

If you bought with less than 20% down, you're paying PMI. Once you hit 20% equity, you can request removal.

The rules:

• Automatic removal at 78% LTV (based on original value)
• Request removal at 80% LTV (may require appraisal)
• Some lenders allow early removal with new appraisal showing 20%+ equity

PMI math:

• Loan amount: $400,000
• PMI rate: 0.5%
• Annual PMI: $2,000
• Appraisal cost: $450

If the appraisal confirms 20%+ equity, you save $2,000/year minus $450 cost. Worth it.

When You DON'T Need an Appraisal

Save your money in these situations.

Casual Curiosity

"I wonder what my house is worth" doesn't justify $450. Use free tools:

• Zillow, Redfin, Realtor.com (check all three)
• Recent sales in your neighborhood
• Free CMA from a local agent

Deciding Whether to Sell

A free Comparative Market Analysis from a real estate agent gives you a professional opinion at no cost. They'll do it hoping for your listing.

Cash Offers on Your Home

Investors and iBuyers making cash offers don't care about your appraisal—they're using their own valuation. Save your money.

Home Equity Loan Shopping

Apply first. If lenders will lend based on AVM, don't volunteer to pay for an appraisal.

Annual Net Worth Tracking

For personal financial tracking, online estimates work fine. Precision to the dollar doesn't matter.

Getting the Best Appraisal Results

If you do need an appraisal, optimize the outcome.

Before the Appraiser Arrives

Do:

• Clean and declutter (helps them see the space)
• Ensure all areas are accessible
• Fix minor issues (leaky faucets, burned-out bulbs)
• Have renovation records ready (permits, costs, dates)
• List recent upgrades they might not see (new HVAC, roof, electrical)

Don't:

• Major renovations the week before
• Follow the appraiser around
• Argue with their methodology
• Pressure them on value

Provide Supporting Information

Give the appraiser a one-page summary:

• Purchase date and price
• List of improvements with dates and costs
• Permits pulled
• Comparable sales you've found (they'll verify)
• Unique features they should know about

You can't tell them what value to reach, but you can ensure they don't miss relevant information.

The Appeal Process

If an appraisal comes in low (typically during purchase or refi), you have options:

1. Provide comps they missed — Maybe they didn't know about the sale two streets over
2. Challenge specific adjustments — Their $5,000 bathroom adjustment might be demonstrably low
3. Request reconsideration of value — Formal process through lender
4. Get a second appraisal — Costs more, lender may or may not allow

Success rate varies. Appraisers are professionals; their values are usually defensible.

Finding a Good Appraiser

For lender-ordered appraisals, you don't choose. But for personal appraisals:

Look For

• State license (required)
• Local market expertise
• MAI or SRA designation (for complex properties)
• Experience with your property type
• Clear communication style

Where to Find Them

• Appraisal Institute directory
• State licensing board
• Referrals from real estate attorneys
• Recommendations from agents (but verify independence)

Questions to Ask

1. How many appraisals have you done in my neighborhood?
2. What's your typical turnaround time?
3. What's included in your report?
4. What information would you like me to prepare?
5. How do you handle disputes?

Appraisal Types and Costs

The Bottom Line

A home appraisal is worth the cost when:

• It's legally or contractually required
• Significant money hinges on the precise value
• You need a defensible, third-party opinion

It's not worth it when:

• You're just curious
• Free alternatives (CMAs, AVMs) are close enough
• No one will see or rely on it

Most homeowners need a professional appraisal only a handful of times—purchase, refinance, maybe estate or divorce. The rest of the time, save your $450.

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