A mortgage appraisal is an independent opinion of the home's market value, ordered by the lender to make sure the property supports the loan. A licensed or certified appraiser inspects the home, selects recent comparable sales nearby, adjusts for differences, and reports a value. Your loan amount is based on the lower of the purchase price or the appraised value, which is why a low appraisal changes the deal.
Who orders it and who pays
The lender orders the appraisal, usually through an appraisal management company, so that neither you, your agent nor the loan officer can choose or pressure the appraiser. Federal appraiser independence rules require that separation. You typically pay for it, often upfront or at the time it is ordered, and you are entitled to a copy before closing.
What the appraiser looks at
- Comparable sales: usually at least three closed sales, ideally recent, nearby and similar in size, age, condition and features. In Arizona that often means the same subdivision or a neighboring one.
- The home itself: square footage, bedrooms and bathrooms, lot, condition, upgrades, pool, view, garage, and any defects.
- The market: whether prices in the area are rising, stable or declining, and how long homes are taking to sell.
- Program requirements: on FHA and VA loans, the appraiser also checks minimum property standards for safety and soundness. See FHA Appraisal Repairs and Sellers and VA Appraisal Tidewater and MPRs.
How comparables decide your value
The appraiser adjusts each comparable to make it look like your home. If a comparable has a pool and yours does not, its price is adjusted down. If yours has a larger lot, the comparable is adjusted up. The reconciled value is the appraiser's judgment of where your home falls among those adjusted sales.
That means the appraisal reflects what has already sold, not what is listed and not what you agreed to pay. In a fast-rising market, contracts can get ahead of closed sales, which is one source of low appraisals.
How long it takes
Inspection is usually an hour or two. The report commonly arrives within a week or two of ordering, longer for unusual, rural or high-value properties. Order it early in escrow. See Escrow Timeline in Arizona.
What happens if the appraisal is low
Your options, depending on your contract and program:
- Renegotiate the price with the seller.
- Cover the gap in cash if you can and want the house anyway.
- Split the difference.
- Request a reconsideration of value with better comparables the appraiser may have missed. Provide specific, closed, comparable sales and a factual explanation. Opinions and list prices do not move appraisals.
- Cancel if your contract's appraisal contingency allows it.
Arizona purchase contracts commonly address appraisal outcomes directly, and many buyers now add appraisal gap language. Read your contract with your agent and see Appraisal Gap on an Arizona Contract.
Appraisal waivers
On some conventional loans, the agency's automated system may accept the value without a full appraisal, sometimes with a property data collection instead. You cannot request it; the system offers it or does not. It can save time and cost, but you lose an independent check on value. An inspection is still your responsibility either way.
Appraisal is not inspection
The appraiser is valuing collateral for the lender, not looking for problems for you. Get a home inspection. See Earnest Money in Arizona for how the inspection period protects your deposit.
Why ask me
- I answer the question before I sell you anything. If renting, waiting or a different program is the better move, I will say so.
- Real numbers, not a calculator guess. I price your actual scenario, side by side, with the fees on the page.
- Every program under one roof. Conventional, FHA, VA, jumbo, and non-QM options like bank statement, DSCR and asset-based loans, so the program fits you instead of the other way around.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
More plain-English answers in the Mortgage Education library.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program guidelines, eligibility requirements and documentation standards vary by investor and change over time. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal or tax advice; consult a qualified professional about your own situation.
Find out which program actually costs you less
FHA, conventional and jumbo price the same borrower very differently once the mortgage insurance is compared across the years you will own the home. Tell me the shape of your file and I will run them side by side.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
