Home Appraisal 101: What You Need to Know Before Buying

A home appraisal is an unbiased evaluation of a property’s fair market value by a licensed appraiser.

It helps both the buyer and the lender ensure the property’s worth aligns with the amount of money being financed.

Since real estate prices can vary widely, an accurate appraisal ensures you’re not overpaying and that you’re getting the financing you deserve.

On this note, we’re going to break down all you need to know about the appraisal process and how it fits into an MD-specific financial strategy.

Home Appraisals Explained

Appraisals are almost always used in home transactions and are common in refinance transactions:

• In purchase-and-sale transactions, appraisals determine whether the home’s contract price is appropriate for its condition, location, and features.
• In refinance scenarios, appraisals serve as a guarantee that the lender isn’t loaning the borrower more than the home is worth.

Why Physicians Should Care About Appraisals

As a physician, your high-income potential combined with substantial student loan debt creates a complex financial picture that most traditional homebuyers don’t face.

To add to that, many physicians look for properties in premium locations with higher-than-average values, which emphasizes appraisal accuracy.

A few other reasons worth noting include:

• Most physicians have significant loan debt, which can influence their debt-to-income (DTI) ratio. An appraisal ensures they’re not overpaying, which protects their financial standing despite existing debt.
• Since physicians frequently relocate for residencies, fellowships, and new positions, appraisals help them understand the true market value in unfamiliar areas and spare them extensive market research.
• There are MD-specific mortgage programs that allow for smaller down payments without private mortgage insurance (PMI). Accurate appraisals are key in these cases to align with lender requirements.

If this is your first time financing a home purchase, be sure to check out our guide on home loans for first-time borrowers.

Why Mortgage Lenders Require Professional Appraisals

Just as you wouldn’t diagnose a condition without proper examination, lenders won’t be inclined to approve a mortgage without verifying the property’s value.

This is particularly relevant for physician mortgage loans, which have looser requirements and more generous terms—such as little to no down payments and high loan amounts—than typical mortgage loans.

Basically, from the lender’s POV, the appraisal ensures that the home you’re looking to buy is adequate collateral for the loan amount. It also ensures that the investment is sound overall.

Home Appraisal Cost

According to surveys by the National Association of Realtors, the typical price for a single-family home appraisal is around $500. HomeAdvisor data reports a lower price range of between $314 and $423, with most single-family home appraisals costing around $356.

With that in mind, we’d say that a good ballpark range for most appraisals is between $300 and $500. As mentioned earlier, prices may vary based on factors like property size and location.

Be prepared to pay for the appraisal upfront or at closing. Also, consider including a buffer in your budget in case the appraisal falls short so that you can cover the gap if need be.

Note: If the home appraiser expects to be paid a percentage of the property’s value, it’s a sign of unethical practice.

The Home Appraisal Process and Timeline

An appraisal typically takes place after a seller accepts your offer to purchase their property, and the process can take 1-3 weeks from start to finish.

Here’s a breakdown of the home appraisal timeline to help you plan accordingly and manage your schedule:

Appraisal Phase	Average Duration	What to Expect
Initial Scheduling	24-48 hours	The lender orders the appraisal after the offer acceptance
Physical Inspection	30-60 minutes	The appraiser evaluates the property
Research and Report	1-3 Weeks	The appraiser conducts market research and prepares their valuation

Phase 1: Initial Scheduling

Your mortgage lender handles this initial step, securing an appointment with a third-party appraiser within 24-48 hours of the loan request.

You’ll be responsible for the cost of the appraisal, which varies depending on the size and location of the house, as well as the appraiser’s experience.

Note: Some states with a high demand for appraisals may see higher appraisal fees.

Phase 2: Physical Inspection

The appraiser’s home visit is brief but thorough, lasting 30-60 minutes on average. They’ll complete a viewing of the property to document its features and improvements.

It’s worth mentioning that, although not as common as in-person inspection, appraisals can also be done remotely via videoconference software or even augmented reality (AR) technology.

Virtual appraisals include the same elements as an in-person appraisal, including inspecting hard-to-reach areas of the house such as an attic or a crawl space. So one isn’t necessarily better than the other.

Phase 3: Research and Report

This final phase is the longest of the three, lasting 1-3 weeks, during which the appraiser conducts local market research, analyzes comparable properties, and prepares their professional valuation.

The appraisal reports must include the following details:

• Street map showing the location of the property and comparable sales
• A sketch of the building’s exterior
• An explanation of how the square footage was calculated
• Photos of the home from the front and back, as well as photos of the street
• Photos of the exterior of each comparable property used
• Other pertinent information like public land records, market sales data, and public tax records

The time it takes to prepare a property appraisal report can be affected by quite a few factors:

• Appraiser’s schedule
• Size and value of the property
• Seasonal factors
• Complexity of the report

What Appraisers Evaluate

First of all, appraisers examine the home’s physical characteristics. This includes square footage, room count, and the overall condition. The quality of construction, recent renovations, and state of major systems like plumbing and HVAC factor into their assessment as well.

Appraisers then look into the location of the property, considering neighborhood quality, school district ratings, and access to transportation routes. They also evaluate future developments that could impact property value.

For physicians, certain property features may carry additional weight. For instance, the home’s proximity to medical facilities becomes especially important if you take regular calls. Even the home layout might be significant if you need a dedicated office space for medical documentation and continuing education.

Knowing these factors helps ensure your investment aligns with both your professional and personal needs.

Handling Different Appraisal Outcomes

If the appraisal comes in below the purchase price, you have several options to consider:

• Renegotiate: Use the appraisal as leverage to negotiate a lower price with the seller. Keep in mind that the seller probably understands that other buyers will likely face the same appraisal issues.
• Make Up the Difference: If you have the means and believe in the property’s value, you can pay the difference between the appraised value and purchase price in cash on your down payment.
• Request a Review: Think the appraisal contains errors or overlooks important factors? Document special features that might have been overlooked and request a reconsideration of value from your lender.
• Walk Away: If you included an appraisal contingency in your offer, you can simply withdraw from the purchase. Disappointing, for sure, but it might be the wise thing to do in some cases.

On the other hand, if all goes well and the appraisal is aligned with the purchase price, the closing process will begin.

The next step would be mortgage underwriting, where the underwriter reviews the entire loan file to make sure everything is in order and that all necessary documents have been submitted.

From there, the underwriter assesses the risk associated with the loan and determines whether to approve or deny it based on all the information provided.

Physician Mortgage Programs

Physician-specific mortgage programs recognize that high student debt and non-traditional income structures make it challenging to qualify for standard home loans. As such, they provide:

• Lower down payments or none at all. Just keep in mind that low appraisal value could impact this flexibility.
• No PMI requirement even with a low down payment. While helpful, PMI waivers can add to your monthly payment if the appraisal doesn’t meet expectations.
• Higher-than-average loan amounts, but if the appraisal is notably lower than the offer, you might need to renegotiate terms.

Post-Purchase Planning

After a successful appraisal and purchase, consider how the property fits into your long-term financial strategy. After all, many physicians find that real estate investment becomes a significant part of their portfolio.

We recommend keeping your appraisal documentation for future reference. It can be valuable for insurance purposes, tax planning, and future financial decisions.

As your career progresses, this documentation can help you keep tabs on your property’s value appreciation, which will inform future real estate investment decisions.

Take the Next Step With Confidence

Trying to make major financial decisions like buying a home can be overwhelming while managing a demanding medical career, but you don’t have to do it alone.

Just as you provide expert care to your patients, your financial well-being deserves specialized attention. This is where we come in.

Physicians Thrive specializes in helping doctors and surgeons make confident investment choices that align with their unique career circumstances and long-term goals.

Reach out to Physicians Thrive today so you can rest assured that your home investment supports both your medical practice and financial future.

Also Read: When Is the Best Time to Buy a House? | Physicians Thrive