An appraisal is a third-party opinion of a home’s value, usually ordered by the lender. It matters because the lender uses the appraised value to determine how much it is willing to finance for the purchase.
If the appraisal comes in lower than the purchase price, the buyer and seller may need to renegotiate, adjust the loan terms, address an appraisal gap, or consider other contract options. This can happen in competitive Minnesota and Western Wisconsin markets when buyers offer above recent comparable sales.