When you're buying a home, there are several steps between contract and closing — and one of the most important is the appraisal. While it can feel like just another box to check, the appraisal can directly impact your financing, negotiations, and even whether the deal moves forward.

After your offer is accepted, your lender orders an independent appraisal. The appraiser evaluates the property, compares it to recent sales, and determines the home’s market value. The lender uses this number to decide how much they’re willing to finance.

From a buyer’s perspective, what really matters is whether the appraisal comes in at, above, or below your contract price. If it comes in at value, everything proceeds smoothly. Your financing moves forward and you stay on track for closing.

If the appraisal comes in higher than the contract price, that’s great news. You’re essentially walking into built-in equity. The bank still lends based on your purchase price, but you know you’re buying at or below market value.

If the appraisal comes in lower than the contract price, that’s where strategy matters. The lender will only finance based on the appraised value — not what you offered. That difference becomes what’s called an appraisal gap. At that point, you may renegotiate, split the difference, bring additional funds, or possibly walk away depending on your contract terms.

In competitive markets like we sometimes see in Columbus and Delaware, Ohio, we may also discuss appraisal gap coverage before submitting an offer. It’s not always necessary, but being prepared allows you to make confident, informed decisions.