Which party typically pays for a property appraisal in a real estate transaction?

The buyer typically pays for a property appraisal in a real estate transaction because the appraisal serves primarily the interests of the lender to assess the value of the property being purchased. However, it is common practice for the buyer to cover this cost upfront. This ensures the lender has a reliable value estimation for underwriting the mortgage loan. While the buyer ultimately benefits from the appraisal by confirming that they are not overpaying for the property, the expense is usually considered part of the buyer's closing costs. This practice can vary depending on specific agreements or local market customs, but in most cases, placing the financial responsibility on the buyer aligns with standard transaction procedures.

A seller may occasionally cover this cost as part of negotiations, but it is less common. A third-party auditor is not typically involved in the appraisal process, as the appraisal is a distinct service usually ordered by the lender. Each of these roles has a different function within a real estate transaction, contributing to why the buyer has the primary responsibility for appraisal costs.