If you’re buying, selling, or refinancing a home, you may be wondering: Is a property appraisal required? The answer depends on the situation, but in many cases, yes—a real estate appraisal is either required by lenders or strongly recommended to protect your investment.
When an Appraisal Is Required
- Home Purchase with a Mortgage: Most lenders require a property appraisal before approving a home loan. This ensures the home’s market value supports the loan amount and protects the lender from lending more than the property is worth.
- Refinancing a Mortgage: When refinancing, lenders typically request an updated appraisal to confirm the home’s current value—especially if you’re trying to remove PMI (private mortgage insurance).
- Divorce or Estate Settlements: Courts or attorneys often require certified appraisals to fairly divide assets or determine property value for tax purposes.
- Home Equity Loans or Lines of Credit: Banks may need an appraisal to evaluate how much equity you have in your home before offering a loan or credit line.
When an Accurate Real Estate Appraisal May Not Be Required
In some situations, like cash purchases, appraisals aren’t mandatory—but they’re still a smart move. An unbiased valuation helps ensure you’re not overpaying.
Some lenders may also waive an appraisal for certain low-risk refinance loans if there’s enough data to support the home’s value through automated valuation models (AVMs).
Bottom Line
While not always legally required, a real estate appraisal is often a key part of the transaction process. Whether it’s mandated by a lender or requested for legal or personal reasons, an accurate appraisal gives you clarity, protects your investment, and supports informed decision-making.