Most appraisals are completed as part of the mortgage lending process, with the lender being the entity to request the appraisal. If you think of it this way, a bank has most of the money on the line. Before lending it to a borrower, they want to know whether that the property is worth the amount of money being borrowed to purchase it. The banks want to be sure that if for some reason the borrower stops making payments on the mortgage and stop paying off the loan, the bank can repossess the house and sell it in order to recoup the money lent in the first place. If an appraisal comes back to lender for far under the contract price, that would raise some concerns that the borrower is attempting to borrow more than the property is actually worth. Along with checking a borrower's credit score, debt-to-income ratio, etc., the appraisal helps the lender assess risk. This is known as the loan-to-value ratio. If a borrower is fronting 50% of the cost of the home for example, that means less risk for the bank. But if the borrower has a very small down payment and is borrowing 90% to 100% of the cost of the property then that is much more risky for the bank.