Home appraisals are required for mortgage approvals, refinancing, and home equity loans, with homeowners ordering them for nine primary reasons: buying or selling property, refinancing mortgages, bankruptcy proceedings, insurance claims, divorce settlements, bail bond collateral, PMI removal, and property tax appeals. A professional home appraisal conducted by a certified appraiser evaluates location, condition, size, and comparable sales to determine accurate market value that protects both lenders and property owners from financial risks.

9 Most Common Reasons to Order a Home Appraisal

1. Selling a Home

Setting the right asking price can make or break a sale. Some homeowners choose to get a pre-listing appraisal before listing their property, especially if they’re unsure about market conditions or recent sales in the area.

• A professional appraisal helps avoid overpricing, which can deter buyers and lead to a stagnant listing.
• It also prevents underpricing, ensuring you don’t leave money on the table.
• While buyers’ lenders will order their own appraisal, having your own beforehand gives you confidence when setting your price.

Some sellers even perform a DIY appraisal using online tools like Zillow’s research platform, but nothing beats a professional assessment for an accurate market valuation.

2. Buying a Home

When purchasing a home, your mortgage lender will almost always require an independent mortgage appraisal before approving your loan. This ensures the property is worth the amount you’re borrowing.

• If the appraisal comes in at or above the agreed purchase price, the loan process continues as expected.
• If the appraisal is lower than the purchase price, you may need to renegotiate, make up the difference in cash, or even reconsider the deal.

While buyers typically pay for the appraisal, some sellers or lenders may cover the cost as part of closing negotiations. Having an accurate appraisal protects both you and the lender from overpaying, following standards set by The Appraisal Foundation.

3. Refinancing or Accessing Home Equity

If you’re considering refinancing your mortgage or taking out a home equity loan or HELOC, your lender will require an updated home appraisal. This helps determine how much equity you’ve built in your home and what loan terms you qualify for.

• A higher appraisal means more borrowing power, better loan terms, and possibly a lower interest rate.
• A lower appraisal could limit your options or require you to wait until home values rise.

Even if you’re not refinancing immediately, knowing your home’s value through NYC real estate appraisals can help you plan future financial moves.

4. Bankruptcy Proceedings

Filing for bankruptcy involves listing all assets, including real estate. A home appraisal provides an accurate valuation, which can impact debt repayment plans and court decisions.

• A higher home value might mean the court requires you to use home equity to pay creditors.
• A lower value could work in your favor, helping protect your home from being liquidated.

If you’re going through financial hardship, having a clear understanding of your home’s worth through litigation appraisal services can help with legal and financial planning.

5. Damage & Construction Defects

Significant home damage—whether from faulty construction, natural disasters, or accidents—can lead to insurance claims or lawsuits. A professional home appraisal before and after the damage can document losses and help establish a baseline for compensation.

• If filing an insurance claim, an appraisal helps determine the financial impact of the damage.
• In cases of construction defects, an appraisal can support legal action against contractors or builders.

Without an accurate valuation from experienced appraisers, homeowners may struggle to prove their losses and receive fair compensation. Property records from NYC ACRIS can provide additional documentation support.

6. Divorce Settlements

When a couple divorces, their home is often one of the biggest assets to divide. A divorce appraisal ensures the division is fair, whether one party is buying out the other or the home is being sold and profits are split.

• If one spouse wants to keep the home, an appraisal helps determine how much they need to pay the other party for their share.
• If the home is being sold, the appraisal helps set a fair market price that both parties can agree on.

In divorce cases, attorneys often require an appraisal to ensure financial fairness and avoid disputes, following guidelines from professional organizations like the American Society of Appraisers.

7. Using a Home as Bail Bond Collateral

If someone needs to post bail and lacks sufficient cash, they may use their home as collateral. In this case, an appraisal is required to confirm the home’s value and ensure it covers the bond amount.

• The higher the home value, the more it can secure in bail funds.
• If the home is valued too low, additional collateral may be needed.

This is a less common but important reason for getting a professional home appraisal through Block Appraisals.

8. Removing Private Mortgage Insurance (PMI)

Homeowners who put down less than 20% on their mortgage usually have to pay private mortgage insurance (PMI). However, if home values rise and equity increases, an updated home appraisal could eliminate PMI payments—saving homeowners hundreds or thousands of dollars annually.

• If an appraisal shows at least 20% equity, you can request PMI removal from your lender.
• Without an appraisal, homeowners may unnecessarily keep paying PMI even when their home is worth more.

Lenders don’t always notify homeowners when they qualify for PMI removal, so proactively getting an appraisal can be financially beneficial. Market data from PropertyShark can help track neighborhood value trends.

9. Appealing Property Taxes

If your property tax bill seems too high, you might be overpaying. Many tax assessments are based on outdated or inflated property values. A professional home appraisal can serve as evidence for a tax appeal, potentially lowering your tax burden.

• If an appraisal shows your home is worth less than the assessor’s valuation, you may be eligible for a property tax reduction.
• Tax appeals require strong documentation, and a professional appraisal is one of the best ways to support your case.

Considering property taxes are recurring costs, even a small reduction can lead to big savings over time. NYC Open Data provides access to property assessment records for comparison.

Renovating & Increasing Home Value: When to Get a Home Appraisal

Planning a home renovation? Whether you’re remodeling your kitchen, adding a new bathroom, or making structural upgrades, a home appraisal can help you understand how these changes may impact your property’s value.

Why Get an Appraisal Before Renovating?

• Prioritize high-value projects — Not all renovations provide the same return on investment. A replacement cost analysis can help determine which upgrades will increase your home’s market value the most.
• Avoid over-improving — If your home is already at the top price range for your neighborhood, an appraisal can prevent you from spending more than you’ll recoup.
• Secure renovation financing — If you’re taking out a home equity loan or cash-out refinance, lenders will require an appraisal to assess how much you can borrow.

Why Get an Appraisal After Renovating?

• Measure the impact of upgrades — A post-renovation appraisal can confirm how much value your improvements have added to your home.
• Adjust your home insurance — If your home is worth more after renovations, updating your insurance policy ensures you’re fully covered.
• Prepare for selling — If you plan to sell soon, an appraisal can help set the right price and highlight your home’s new features.

A home appraisal is a valuable tool for homeowners who want to make smart renovation decisions and maximize their investment. Whether you’re upgrading for personal enjoyment or preparing to sell, knowing your home’s true worth before and after renovations can help you plan with confidence.

Final Thoughts: Why a Home Appraisal Matters

A home appraisal isn’t just a routine step in buying or selling a property—it’s a crucial financial tool that helps homeowners, buyers, and lenders make informed decisions. Whether you’re securing a mortgage, refinancing, settling legal matters, or even planning renovations, a professional appraisal provides an accurate, data-backed valuation of your home. With so many financial decisions tied to property value, having an up-to-date and precise appraisal can save you time, money, and potential headaches.

Key Takeaways:

• A home appraisal ensures you don’t overpay when buying or accept too little when selling.
• Lenders require appraisals for mortgages, refinances, and home equity loans to determine loan eligibility.
• A divorce, bankruptcy, or legal settlement may require an official valuation to divide assets fairly.
• An appraisal can help eliminate PMI payments or lower property taxes through appeals.
• Before and after renovations, a home appraisal helps measure how much value improvements add.
• Appraisals also serve insurance claims, estate planning, and even bail bond collateral.

If you’re planning any financial move involving your home, working with a certified and experienced appraiser is key. Contact Block Appraisals today for a professional, accurate assessment of your property’s true market value! Whether you need an appraisal for buying, selling, refinancing, or any other reason, our bespoke appraisal solutions ensure you have the information you need to make the best decisions.

Frequently Asked Questions (FAQs) About Home Appraisals

What factors impact my home’s appraised value?

Key factors include location, home size, condition, recent sales of similar properties, upgrades, and the overall real estate market. A well-maintained home in a desirable neighborhood generally appraises higher. Standards from The Appraisal Institute guide professional assessments.

Can I challenge a low home appraisal?

Yes, if you believe the appraisal is inaccurate, you can request a reconsideration of value by providing additional comparable sales, highlighting overlooked home features, or pointing out factual errors in the report.

Do home appraisals and home inspections serve the same purpose?

No. An appraisal determines a home’s market value, while an inspection evaluates its condition to identify potential repairs or structural issues. Lenders require appraisals, but inspections are usually optional for buyers. The NYC Department of Buildings provides inspection guidelines.

Can home improvements increase my appraisal value?

Yes! Renovations like kitchen remodels, bathroom upgrades, energy-efficient features, and curb appeal enhancements can boost your home’s value. However, not all improvements have the same return on investment. Consider market rent studies for rental properties.

What happens if my home appraises for less than the sale price?

If an appraisal comes in lower than the agreed sale price, buyers may renegotiate, pay the difference in cash, or back out if they have an appraisal contingency in their contract. Sellers may also contest the appraisal or lower the price.

How often should I get my home appraised?

Most homeowners only get appraisals when buying, selling, refinancing, or disputing property taxes. However, if home values in your area are changing rapidly, it may be wise to get one every few years. Professional guidance from NAR can help determine timing.

How does a home appraisal affect my refinance approval?

If your home appraises higher than expected, you may qualify for better loan terms and lower interest rates. A lower appraisal, however, might limit your borrowing power or prevent the refinance altogether. Commercial appraisals follow similar principles for investment properties.