Who Usually Pays For An Appraisal?

The buyer is responsible for paying the appraisal fee in the vast majority of real estate transactions. Even though the lender orders and requires the appraisal to protect their investment, the buyer bears the cost as a standard borrowing expense included in closing costs or paid upfront before the appraisal is conducted.

Why the Buyer Pays

The arrangement exists because the appraisal primarily serves the lender’s interest—ensuring the property value supports the loan amount being requested. While the lender arranges and selects the appraiser (typically through an Appraisal Management Company to ensure independence), the borrower assumes the cost as part of the mortgage approval process. This cost-responsibility structure is standardized across federally regulated lending to maintain appraiser independence and prevent conflicts of interest where lenders might pressure appraisers to inflate valuations.

Payment Timing

In most cases, buyers pay the appraisal fee upfront before the appraisal is conducted, as lenders require early payment to move the loan process forward efficiently. However, the fee may alternatively be collected at closing and listed on the closing disclosure document, which borrowers receive three days before closing. Either way, the responsibility remains with the buyer.

Rare Exceptions

While uncommon, sellers occasionally agree to cover the appraisal fee as a negotiation incentive, particularly in buyer-favorable markets where the seller wants to make their property more competitive. If a seller orders a separate appraisal to challenge a low valuation, they would bear that cost.

The Refinance Scenario

When homeowners refinance mortgages, the borrower (homeowner) continues to pay the appraisal fee, not the lender.

Non-Refundable Nature

An important consideration: appraisal fees are typically non-refundable once the appraisal is completed, even if the sale falls through, the loan is denied, or the buyer decides not to proceed. The buyer must pay for the completed service regardless of transaction outcomes, though some lenders may negotiate partial refunds if cancellation occurs before the appraisal is finished.

Real Estate Agents Don’t Pay

Real estate agents do not pay appraisal fees in standard transactions; this responsibility falls entirely to the buyer.