Washington DC Home Appraisals

Author: Susan Isaacs | The Isaacs Team

Washington DC home appraisals play a key role in real estate transactions.

Learn About Appraisals


Your appraisal must return a value equal to or greater than the contracted price of the home you’re purchasing. If your appraisal comes back low, you’ll be required to make up the difference in cash at the closing table. We outline how appraisals impact your transaction, how to protect yourself, and how DC home appraisers determine value.

What is a DC home appraisal?

A home appraisal is a professional property valuation performed by a licensed appraiser, typically ordered by a lending institution to establish collateral value.

Appraisals apply to most residential property types, including detached and attached single-family homes, townhouses, cooperatives and condominiums.

Common reasons for ordering an appraisal include initiation of mortgage loans, home refinance loans (HELOC), and tax assessment valuations.

How Do Washington DC Home Appraisers Determine Value?

Home appraisal can be quite complicated, and a good resource is Basic Real Estate Appraisal, 9th Edition.

But explained in basic terms, Washington DC home appraisers use a number of approved methods of valuing real property, some of which are:

  • The sales comparison approach
  • The Cost approach
  • The income approach (multifamily)

The sales comparison approach calls review of recent sales and listings of comparable properties in order to estimate value. Contributing factors include the square footage of the home, land area, architectural style, age of the dwelling, quality of construction, number of bedrooms and bathrooms, presence or absence of a basement, garage, outbuildings, etc.

The cost approach can be used to appraise most types of improved property, but is the most reliable when valuing unique or new construction properties. It generates a value based on the sum of the estimated land value, plus the depreciated cost of the dwelling and other improvements.

An appraiser may utilize the income approach for multifamily properties, where income is a factor. 

Some lenders work with appraisal companies that utilize automated property valuation systems in addition to human field appraisers.

Caren Says

“Our process was smooth and quick, and they designed a strategy and negotiated a sale well above our asking price; and a purchase price below asking – both in the same market.”

How Do Appraisals Differ From CMAs?

Ostensibly, appraisal value is used by appraisers to establish the value of property while a Comparative Markey Analysis establishes the property’s price, however real estate agents also use CMAs as a tool to generate a value range for properties buyers wish to purchase. Taken into account are:

  • Market Research, including price per square foot during the previous 3-6 month period;
  • Sold-to-list price ratio for sold, similar homes in the immediate neighborhood;
  • Market activity within a one mile radius;
  • Individual property comparisons for properties within the same radius having similar attributes, including size, age, condition, upgrades and additions, and other attributes;
  • Adjustments for differences.

Agents may also take into comsideration market influences, time of year and buyer preferemces.

How An Appraisal Impacts Your Home Purchase

Offer terms are nearly as important as the price offered for the home in the competitive Washington DC real estate market. Buyers balance terms and price to submit the strongest possible offer package.

Terms can include escrow period, earnest money deposit, form of payment (cash, mortgage loan, assumption, etc.), special accommodations such as seller rent-backs, seller home-to-purchase contingencies, buyer payment of special assessments or seller closing costs, etc., and contingencies such as inspection, financing, and appraisal.

Lenders require the appraisal to match the purchase price of the home, at minimum. If an appraisal returns a value lower than the purchase price, the buyer must make up the difference in cash at settlement, along with their downpayment and closing costs, unless they are able to renegotiate the purchase price with the seller.

For this reason, when DC home buyers are financing a purchase, they often wish to include financing and appraisal contingencies in their sales contracts.

These provisions offer specified protections individually, and complete mitigation of risk when included in a sales cotract together, assuring the buyer that their Earnest Money Deposit will be returned in full and they’ll be released from the contract without penalty should their mortgage application fail.

This seems understandable, even advisable, but in the aggressive DC real estate market, where homes sales outpace comps, and bidding wars are the norm, adding financing and appraisal contingencies can quickly sour a seller on the buyer’s offer. Why?

Financing and appraisal contingencies are two of the most important considerations for sellers when evaluating offers, especially in multiple offer situations, because the buyer protections contained in these clauses shift risk to the seller.

While the buyer who includes one or both of these contingencies may offer a higher purchase price than completing buyers, sellers know that the appraisal may come back below value, forcing them to negotiate the price down or walk away from the deal. That’s quite a gamble since taking a home off-market for one to three weeks to await appraisal results, then re-marketing it means they not only lose their original pool of eager buyers, but their property has been somewhat stigmatized by the fallout of the contract and increased days on market.

For this reason, appraisal comtingencies can cause buyers to lose a multiple offer competition, or pay more for a home than they would with a clean offer,

How Does The Appraisal Process Work In DC?

Appraisals are ordered by the Buyer’s lender, who becomes the appraisal’s client, even though the Buyer pays for the appraisal. Each lender works with an appraisal company, or “pool.”

Appraisal Management Companies (AMCs) are also an option for lenders. These are appraisal management companies who order, track and deliver appraisal reports.They’ve recently come under fire from appraisers, who say AMCs are delaying appraisals for days, even weeks, as lenders shop for appraisers with the lowest fees.

Affiliations with appraisal companies and AMCs are a considertation when selecting a lender.

Your loan officer is legally prohibited from contacting the appraiser directly–he or she must rely on the underwriting department for scheduling, review and correction of appraisals–but regulations allow real estate agents, or ‘other persons with an interest in the real estate transaction’ to communicate with the appraiser and provide additional property information.

The appraiser will determine if the property and loan qualify for a ‘desktop appraisal‘ generated using computer software, floor plans, and data from tax records and the MLS, or requires a full appraisal, with the appraiser inspecting the home in person, taking photos, measuring and evaluating the condition of the home firsthand. Generally, a desktop valuation is an option for homes in average condition, while a full appraisal is recommended for homes in below average or highly upgraded condition.

The Buyer’s lender will furnish the appraiser with a copy of the sales contract. Government Sponsored Enterprises (GSEs) require that an appraiser must confirm analysis of the contract on the appraisal report. The appraiser looks at the terms of the contract and compares them with what is typical in the market, reviews the interest rate, down payment amount, seller contributions and any personal property items that might be included in the sale, such as furnishings. The appraiser must also verify that the property seller is the owner of public record.

Once the appraisal is completed, it is sent to the lender’s underwriting department for review. In its final form, the appraisal is released to the loan officer, who passes it on to the Buyer. If the value is equal to or above the sales price, the property has “appraised” and an appraisal contingency can be removed. If the value is lower than the sales price, the Buyer and Seller have options depending upon the terms of their contract:

  • The Buyer can opt to pay the difference between the appraised value and the purchase price. This has to be paid in cash, adding to the rest of the Buyer’s closing costs;
  • The Seller and Buyer can negotiate the purchase price down to the appraised value, or somewhere in between;
  • The Buyer can challenge the appraisal. In the past, this has been very difficult to do and most often unsuccessful. But in 2024, HUD and GSEs announced the introduction of a new appraisal review process to become effective in August. Read about it here. A closing date extension may be required to facilitate a re-appraisal if one is granted, or if the Buyer decides to change lenders. Seller would have to agree to both;
  • The contract can be voided if its terms allow.

Does the GCAAR Financing Contingency form provide appraisal protection for buyers?

The GCAAR (Greater Capital Area Association of Realtors) contract form (2017) does not offer the same protections as a separate appraisal contingency. Ask us to explain appraisal ramifications and contingencies for your DC real estate transaction.

Updates to the District of Columbia Home Appraisal Contingency And Notice

In July 2022, GCAAR (Greater Capitol Area Association of Realtors) revised the Addendum of Clauses form, which contains the clauses relating to appraisal contingencies, and the Appraisal Notice/Addendum form.

Who regulates District of Columbia Property Appraisers?

The District of Columbia Board of Real Estate Appraisers regulates the real estate appraisal practice, including the functions of a state appraiser certifying and licensing agency under Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, approved August 9, 1989. The Board protects consumers by enforcing the District of Columbia real estate license law.

The Board consists of five members appointed by the Mayor. Three members are real estate appraisers licensed in the District, one is a real estate broker licensed in the District, and one is a consumer member. Three members of the Board constitute a quorum.

The Board meets on the third Wednesday each month at 10:00 AM. You can access the calendar at OPENDC.



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