The Real Estate Investor's Guide to Understanding Property Appraisals

Buying a U.S. investment property from abroad comes with a long checklist. Financing, legal setup, due diligence, and the list goes on. As you obtain a mortgage, you’ll encounter a key term: appraisal. An appraisal is a professional estimate of a property's current market value. It’s important to understand because it affects how much you can borrow, and this article breaks the whole process down in simple terms.
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What exactly happens during an appraisal? How does it affect your loan approval or the final purchase price? And what should you do if the appraised value doesn’t match what you offered?
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Let’s walk through the basics of appraisals, so you know what to expect.

Key takeaways

• A property appraisal is an independent, professional estimate of a property’s market value, used by lenders to make informed financing decisions.
  
  
• Appraisals are typically required for mortgage approvals and refinancing, which can influence your loan amount and loan-to-value (LTV) ratio.
  
  
• Investors can use appraisals to negotiate and shape their portfolio strategy, making sure each purchase fits their long-term goals.

What is a property appraisal?

Appraisals are carried out by licensed or certified real estate appraisers. These professionals have met state credentialing requirements and adhere to the Appraisal Foundation's standards. They must act in their capacity as an independent appraiser when conducting valuations for financing.

The purpose of an appraisal for lenders is to verify that the property’s value is sufficient to secure the requested loan amount. It’s important to note that an appraisal is not the same as the purchase price. The appraised value is based on market data and professional assessment, while the purchase price is simply what a buyer agrees to pay. 

Appraisals also give investors a clearer picture of a property’s true market value, which can be especially useful when determining whether the purchase price is fair or when evaluating potential returns. A higher appraisal can sometimes strengthen an investor’s position with lenders—helping secure better loan terms or higher leverage—while a lower appraisal may prompt a reassessment of the offer or financing strategy. In this way, the appraisal serves as both a risk-management tool for lenders and a decision-making resource for investors.

When do investors need an appraisal?

Appraisals can occur at multiple points depending on the purpose of the appraisal.

• Mortgage or purchase financing: This is the most common type of appraisal, typically conducted after a property is under contract when the buyer is seeking financing. Lenders rely on the appraisal to determine the loan amount they’re willing to provide.
  
  
• Refinancing: When refinancing an existing rental property, lenders require a new appraisal to verify the property’s current market value and ensure it still justifies the requested loan amount. In a cash-out refinance, this may influence the amount of cash back at closing.
  
  
• Portfolio evaluation (optional): Even outside of lending, investors sometimes order independent appraisals to understand the current market position of their holdings. This is especially common before selling or restructuring financing.

How appraisals work

Appraisals require a detailed examination of the subject property. Each appraisal follows a structured process to ensure accuracy and fairness. Here’s how they work:

Step 1: Lender orders the appraisal

After your offer is accepted and your loan application is reviewed, your lender orders the appraisal through an independent, licensed appraiser to prevent any conflict of interest.

Step 2: The appraiser conducts a property visit

The appraiser inspects the home inside and out, taking pictures and noting details like square footage, property condition, renovations, and layout. For international buyers, this process may require remote coordination. Having a local contact, such as your real estate agent or property manager can help the appraiser access the property and gather accurate data for evaluation.

Step 3: The appraiser researches the market and compares recent sales

Using local market data, the appraiser compares your property to recent “comps,” or comparable data on similar properties sold nearby within the past 3–6 months. Adjustments are made for differences in property size and features.

Step 4: The appraiser compiles a detailed valuation report.

The appraiser creates a detailed report that includes photos, comparable property data, valuation methods, and a final estimated market value.

Step 5: The lender receives the report and reviews it. 

Appraisals typically take between a few business days to a few weeks complete, depending on market activity and property location. Once ready, the report is sent to the lender who shares the results with you. This figure helps determine your loan amount and can impact negotiations before closing.

What if the appraised value differs from the purchase price?

One of the most common appraisal questions is: “what happens if the numbers don’t match?” This happens on a new mortgage when the appraisal is higher or lower  than the purchase price. On a refinance, it occurs when the appraisal differs from the estimated value. These can impact your loan amount.

Low appraisal

If the property appraises below the purchase price, lenders can only base financing on the lower appraised value. For instance, if you agreed to pay $500,000 but the appraisal comes in at $475,000, your loan amount would be based upon the appraisal number, reducing your approved loan amount. If this happens, you have several options:

• Renegotiate the purchase price with the seller: You can ask the seller to lower the price to match the appraised value. This keeps your financing on track and avoids needing extra cash. Sellers may be willing to negotiate, especially if the appraisal impacts your ability to secure a mortgage.
  
  
• Pay the cash difference: If you still want to move forward at the original purchase price, you can cover the gap between the appraisal and purchase price out of pocket. In the example above, you would pay an additional $25,000  between the appraised value and the agreed price as a bigger down payment. This option requires having extra funds available but lets you secure the property without changing the contract.
  
  
• Request a reevaluation of the property: You can dispute the appraisal. If you believe the appraiser missed key factors, such as recent renovations or overlooked comparable sales, you can ask for a second appraisal or reconsideration. Lenders may allow this if you provide additional documentation or evidence to support a higher value. This can sometimes increase the appraised value and restore the originally intended loan amount.

High appraisal

A high appraisal is like music to a real estate investor’s ears. It means that you’ve just gained instant equity! When the property is worth more than your purchase price, this strengthens your financial position.

High appraisals are especially significant in refinances, because the new loan is based on the appraised value, not the original purchase price. For example, if you thought your property was worth $500,000 but the appraisal comes in at $550,000, your new loan could be based on the higher amount.

In a cash-out refinance, a high appraisal can be especially valuable because your lender bases the loan on the appraised value of the property. Lenders determine the maximum loan amount using the loan-to-value (LTV) ratio, which is the percentage of the property’s appraised value they are willing to lend. At Waltz, this is typically up to 70% LTV, though it may vary depending on the property and loan program.

Keep your appraisal on track with a lender you can trust

Property appraisals play a critical role in every real estate transaction, especially when financing from abroad. They confirm fair market value and protect against over borrowing.

With the right lender, this step becomes seamless. Waltz not only handles the appraisal process from start to finish but also reviews valuations and assists with negotiations when the appraised value differs from the purchase price. Our fully digital platform keeps timelines on track, so appraisals and closings stay coordinated.

For international investors, Waltz provides end-to-end support through coordinated documentation, transparent communication, and ongoing education about the U.S. real estate financing process. Close your investment confidently. Get started with Waltz today.