No, sellers do not usually pay for the appraisal. In the vast majority of real estate transactions, the buyer is responsible for paying the appraisal fee.
Standard Practice
The buyer typically pays for the home appraisal because they are the ones who need the mortgage loan, and the appraisal is required by their lender to ensure the property is worth the loan amount.. Most mortgage lenders arrange and schedule the appraisal, but the home buyer covers all the fees upfront, rather than rolling them into closing costs.
Why Sellers Don’t Usually Pay
There are several practical reasons why sellers don’t typically pay for appraisals:
Limited Value to Sellers: Appraisals are not considered worth the money to sellers because a home is ultimately worth what somebody will pay for it, and real estate agents are better positioned to determine market value.
Lender Requirements: Each lender typically requires their own appraisal using an appraiser from their approved network, making any seller-provided appraisal essentially worthless to future banks.
Buyer’s Need: Since the appraisal is primarily for the lender’s benefit to verify the loan amount is appropriate, it makes sense for the buyer (who needs the loan) to pay for it.
Exceptions When Sellers Might Pay
While uncommon, there are rare situations where sellers may cover the appraisal cost:
- Seller Concessions: In a buyer’s market, sellers might agree to pay for the appraisal as a concession to sweeten the deal and attract buyers.
- Negotiated Terms: The payment responsibility can be negotiated during the contract period, though this is unusual.
- Market Conditions: If the housing market heavily favors buyers, sellers might offer to pay this fee to make their property more attractive.
Cost Considerations
Home appraisals typically cost between $400-$800 for single-family homes, with a national average of around $400. Government-backed loans (FHA, VA, USDA) often have higher appraisal costs, averaging around $750, due to additional documentation requirements.
The bottom line is that while sellers could theoretically pay for appraisals, it’s not standard practice because the appraisal primarily serves the buyer’s and lender’s interests rather than the seller’s needs.