Buying a home involves many important steps, from inspections and negotiations to financing and closing. One of the most crucial parts of the process is the home appraisal. It determines the fair market value of the property and protects both the buyer and the lender. But many first-time buyers often ask the same question: when buying a home, who pays for the appraisal?
Below is a complete explanation of how appraisal fees work, who usually covers them, and what you can expect as a buyer or seller.
What Is a Home Appraisal and Why It Matters
A home appraisal is a professional evaluation of a property’s current market value performed by a licensed appraiser. Mortgage lenders require an appraisal before approving a loan to make sure the amount they lend reflects the home’s true worth.
An appraiser considers details such as:
- The home’s location and nearby comparable sales
- Property size, layout, and age
- Condition of the home and recent updates
- Market trends in the area
The appraisal ensures that everyone involved in the transaction makes a financially sound decision.
What Is an Appraisal Fee?
The appraisal fee is the amount paid to the professional who conducts the appraisal. On average, appraisal fees range from $400 to $800, depending on several factors such as the type of loan, the property’s size, and local market conditions.
In areas with competitive housing markets, like Scottsdale, Phoenix, and Arcadia, the cost may be slightly higher because of increased demand and the complexity of evaluating luxury properties.
Who Pays for the Appraisal When Buying a Home
In most home purchases, the buyer pays for the appraisal. This is because the appraisal primarily benefits the buyer and the lender by confirming the property’s value before the mortgage is approved.
The appraisal is usually ordered by the lender once the purchase agreement is signed, and the fee must be paid upfront. In some cases, however, the seller may agree to pay the appraisal fee as part of a negotiated deal or to make their property more appealing to buyers.
Typical Breakdown of Responsibilities
| Expense | Usually Paid By | Details |
|---|---|---|
| Appraisal Fee | Buyer | Paid upfront during the mortgage process |
| Home Inspection | Buyer | Conducted before the appraisal |
| Repairs or Credits | Seller | Agreed upon after inspection results |
| Closing Costs | Buyer/Seller | Often shared or negotiated |
When Is the Appraisal Fee Paid
The appraisal fee is normally paid right after the buyer’s mortgage application is submitted. Lenders will not order the appraisal until the fee has been collected. Buyers typically pay this fee directly to the lender or to the appraisal management company coordinating the process.
Since it is an upfront expense, buyers should budget for the appraisal early in the home-buying process.
Who Pays for Appraisals in Different Loan Types
FHA Appraisals
For FHA loans, the buyer pays the appraisal fee. FHA appraisals include an inspection component to make sure the home meets federal safety standards.
Typical cost: $500–$900
VA Appraisals
With VA loans, the buyer (veteran) usually pays for the appraisal. The Department of Veterans Affairs sets regional maximum fees to prevent overcharging.
Typical cost: $600–$800
Conventional Appraisals
For conventional loans, the buyer also pays the appraisal fee. This cost is part of the upfront expenses before loan approval.
Is the Appraisal Fee Refundable
The appraisal fee is non-refundable, even if the transaction does not close. Once an appraiser completes the report, their work has been delivered and must be compensated.
Buyers can avoid wasted costs by ensuring all other contingencies, such as inspections and financing, are on track before ordering the appraisal.
Is the Appraisal Part of Closing Costs
While the appraisal fee contributes to the overall cost of buying a home, it is not considered a closing cost in most cases. It is classified as a prepaid expense that appears on your loan disclosure statement for transparency but is usually paid before the closing date.
When Can the Seller Pay for the Appraisal
Although the buyer typically pays for the appraisal, the seller might cover it under certain conditions:
- New construction where the builder includes the appraisal as part of the package
- Buyer incentives offered by the seller to make the property more attractive
- Seller credits negotiated during the contract phase to help balance closing costs
In upscale markets like Arcadia or Scottsdale, sellers may occasionally offer to pay the appraisal to make their home stand out among luxury listings.
Who Orders the Appraisal
The lender orders the appraisal after the buyer applies for a mortgage. This is done through an Appraisal Management Company to maintain fairness and compliance with lending regulations. Buyers cannot choose their own appraiser for loan-related valuations, although sellers can hire their own for pre-listing purposes.
Expert Insight from Kelly Jones
According to Kelly Jones, a Scottsdale real estate agent and trusted realtor in Phoenix, understanding appraisal costs can help buyers avoid financial surprises.
“An appraisal is one of the most important checkpoints in a real estate transaction. It gives both the buyer and lender peace of mind that the property’s price reflects its true market value. Knowing who pays for the appraisal ahead of time helps clients budget more confidently and keeps the process smooth from start to finish.”
As a luxury real estate agent in Arcadia, Kelly Jones has guided countless buyers through complex transactions, ensuring that every step—from appraisal to closing—is transparent and stress-free.
Tips for Buyers to Manage Appraisal Costs
- Budget early. Include the appraisal fee in your upfront expenses.
- Ask your lender. Confirm how and when payment is collected.
- Keep documentation. Save payment receipts for loan records.
- Work with a knowledgeable agent. A professional like Kelly Jones can help anticipate appraisal outcomes.
- Negotiate when possible. In competitive situations, your agent might request the seller to contribute to the cost.
Conclusion
In most cases, the buyer pays for the home appraisal because it protects both the buyer and the lender by verifying the property’s true value. The appraisal is a small but essential step toward securing your mortgage and finalizing the purchase.
If you’re buying or selling a home in Phoenix, Scottsdale, or Arcadia, contact Kelly Jones, your trusted local real estate expert, for professional guidance through every stage of the process.