I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. Call (800) 239-1103.
What Is a Home Appraisal and How Does It Affect Your California Mortgage?
A home appraisal is a lender requirement on virtually every California home purchase — and understanding it can prevent your deal from falling apart at the worst possible moment.
What Is a Home Appraisal?
An appraisal is an independent professional opinion of a property’s market value. Your lender orders it from a licensed, independent appraiser — you pay for it (typically $600–$1,200 in California), but neither you nor the agent can influence the outcome.
Why Lenders Require Appraisals
The lender is using the home as collateral for the loan. If you default, they need to know the property is worth at least what they loaned you. A lender will only loan against the lesser of the purchase price or the appraised value — a critical concept called the loan-to-value (LTV) ratio.
What Appraisers Look At
Comparable sales (comps): Recent sales of similar homes within 1 mile, ideally within the past 6 months. In thin markets like Marin County, appraisers may need to go back 12 months or expand the radius.
Property condition: Appraisers note any health/safety issues — broken windows, exposed wiring, roof damage. FHA loans have stricter condition standards than conventional.
Square footage and features: Bedroom/bathroom count, garage, lot size, upgrades.
Location adjustments: Busy road, view, backing to greenbelt — these affect value.
What Happens If the Appraisal Comes In Low?
A low appraisal is one of the top reasons California deals fall apart. If a home is appraised at $900K but you’re paying $950K, the lender will only finance based on $900K. Your options:
1. Renegotiate the price down to the appraised value. 2. Cover the gap with cash. 3. Dispute the appraisal with a rebuttal (limited success rate — requires additional comps). 4. Walk away using the appraisal contingency. In competitive Bay Area markets, many buyers waive the appraisal contingency — understand this risk fully before doing so.
Appraisal Timelines
Standard timeline: 5–10 business days from order to delivery. Rush appraisals cost $200–$500 extra but can be worth it to hit purchase contract deadlines in 21-day escrows.
VA and FHA Appraisals
Government-backed loans have separate appraisal requirements. VA appraisals include a Minimum Property Requirements (MPR) inspection. FHA appraisals flag health and safety issues more aggressively. Both can create complications on older California homes with deferred maintenance — something to discuss with your broker before making offers on as-is properties.
Frequently Asked Questions
Who orders the appraisal and who pays for it in California?
The lender orders the appraisal through an Appraisal Management Company (AMC) — a neutral third party that assigns the appraiser. The buyer pays the fee (typically $600–$1,200 for a single-family home in California), usually upfront or at closing. Because the lender orders it through an AMC, neither the buyer, seller, nor real estate agent can directly select the appraiser or influence the outcome.
Can I challenge a low appraisal on a California home?
Yes — through a formal Reconsideration of Value (ROV). Your real estate agent or mortgage broker submits comparable sales the appraiser may have missed, along with a written rebuttal. The appraiser reviews and responds — they may adjust the value, maintain it, or clarify their methodology. Success rates vary widely. The ROV works best when the appraiser genuinely missed relevant comps; it rarely works when the appraiser’s methodology was sound but you simply disagree with the value conclusion.
Do all California mortgages require an appraisal?
Not always. Fannie Mae and Freddie Mac offer appraisal waivers (also called Property Inspection Waivers or Value Acceptance) on some purchases where the automated underwriting system has high confidence in the property value based on existing data. These are more common on refinances than purchases. When available on a purchase, they save both time and money. Ask your broker if your loan file qualifies — not all lenders pass through available waivers to borrowers.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | Licensed since 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
