An appraisal is a third party verification of value. An appraisal company will visit the property you are purchasing or refinancing and complete an appraisal report to provide an approximated value of the home. To do this, they compare the features of the home that they are appraising with comparable homes that have sold recently.
Appraisals are required on all purchases and refinance unless you receive an appraisal waiver from the automated underwriting system. In that case, you will not be required to purchase an appraisal but you still can if you wish to do so.
If you are required to do an appraisal, the usual cost for one is between $500 to $800 dollars, depending on which appraisal management company is being used.