Worried about how an appraisal could impact your Los Altos sale or purchase? In a market where prices are high and inventory is tight, a small valuation gap can mean a big change in your financing or negotiation plan. You deserve clear, local guidance that helps you prepare, avoid surprises, and respond confidently if the number is not what you expected. This guide explains how appraisals work in Los Altos, what drives value, how timing fits into your contract, and the smart steps you can take whether you are buying or selling. Let’s dive in.
What an appraisal is (and is not)
An appraisal is a licensed appraiser’s opinion of market value at a specific point in time. Lenders use it to help underwrite your loan and set the maximum loan amount.
It is different from a home inspection, which focuses on a home’s condition, and from a broker’s price opinion or CMA, which agents use for pricing strategy. Appraisals follow professional standards known as USPAP and California licensing rules through the Bureau of Real Estate Appraisers.
In Los Altos, appraisals carry extra weight. Values are high, sales are often competitive, and truly comparable recent sales can be limited. A small percentage difference in value can create a large dollar gap that affects your loan and your next steps.
How appraisers determine value
Appraisers rely on three main approaches and choose what best fits the property.
Sales Comparison Approach
This is the most common method for single-family homes. The appraiser compares your home to recent nearby sales and adjusts for differences like lot size, square footage, bed and bath count, condition, and upgrades. In Los Altos, adjustments also often account for privacy, outdoor usability, proximity to busy streets, and location nuances.
Cost Approach
The appraiser estimates what it would cost to rebuild the home today, subtracts depreciation, and adds land value. This can be useful for unique properties or newer construction.
Income Approach
This applies when a property produces rent. While most Los Altos single-family homes are owner-occupied, the income approach may be considered if there is an accessory dwelling unit with documented rental income.
Local adjustment factors that matter
- Square footage and how living area is defined and verified.
- Bed and bath count and functional layout.
- Lot size, usable outdoor space, landscaping, and privacy.
- Condition and quality of finishes, from kitchens and baths to windows and roof.
- Documented, permitted remodels and the presence and permit status of an ADU.
- Site specifics like view, topography, setbacks, and tree coverage.
- School district boundaries and assigned schools, evaluated neutrally by appraisers.
- Proximity to major employers and commute routes.
- Zoning, lot coverage, and potential for future development when applicable.
Appraisers pull data from the MLS, public records, and permit history, and they perform an on-site inspection to confirm features and condition.
The appraisal process and timeline in Los Altos
Typical steps
- Your lender orders the appraisal after you are in contract.
- The appraiser schedules and completes an interior and exterior inspection.
- Research, analysis, and report writing follow.
- Turnaround is often several days to 1–2 weeks based on complexity and workload.
- The lender uses the report to underwrite your loan and confirm loan-to-value.
Types of appraisals
- Full interior appraisal is the standard for most loans.
- Drive-by appraisal is exterior only and is less common for higher-value homes.
- Desktop or AVM-based reviews are rare for non-standard, high-priced properties.
- Appraisal waivers can occur in certain low-risk loan scenarios but are uncommon in Los Altos given price points and property diversity.
Loan programs you may encounter
- Conventional loans follow Fannie Mae and Freddie Mac guides.
- FHA and VA loans have additional appraisal and property standards.
- Jumbo loans, which are common in Los Altos, usually require full appraisals and may include stricter documentation.
Contract timing
Your purchase agreement sets appraisal and loan contingency deadlines. The appraisal result can influence your ability to obtain financing and your rights to renegotiate or cancel based on those terms.
Local challenges in Los Altos
Why appraisals can be tricky here
- Close comparable sales can be scarce, especially for unique homes or large lots.
- Rapid market shifts can push contract prices ahead of recent closed sales data.
- Off-market and competitive bidding scenarios sometimes produce prices that are hard to support with recorded comps.
- Extensive custom upgrades and luxury finishes may be hard to quantify.
- Unpermitted additions or unclear permit history can reduce appraised value or require adjustments.
Smart strategies for sellers
- Consider a pre-listing appraisal or broker price opinion to set expectations.
- Prepare documentation. Keep permits, contractor invoices, scope of work, material lists, and dates of upgrades in one file.
- Highlight market-relevant features such as a permitted ADU, energy systems, or functional layout improvements.
- Discuss a plan for a low appraisal before going live, including price adjustments, credits, or buyer contributions if needed.
Smart strategies for buyers
- Know your appraisal and loan contingencies. Understand deadlines and remedies.
- If the appraisal is low, you can request a price reduction, pay the difference, submit additional comps for reconsideration, or cancel if your contract allows.
- Share objective data that supports the contract price. Provide evidence of permits and comparable sales with similar features.
Steps both sides can take
- Work with a local agent who understands comp selection in Los Altos and how appraisers adjust for unique features.
- When possible, ensure the appraiser has access to documents that clarify permits, major systems, and recent upgrades.
- Be ready to pursue a reconsideration of value through the lender if errors or stronger comps are identified.
What appraisers look at during inspection
Appraisers confirm property characteristics and overall condition. Expect attention to:
- Overall quality and maintenance, including roof, windows, HVAC, plumbing, and electrical.
- Kitchen and bath updates, materials, and workmanship.
- Layout functionality, room count, and permitted living area.
- Lot utility, privacy, outdoor improvements, and any structures such as an ADU or studio.
- Location influences such as nearby traffic or rail and site topography.
Permits, ADUs, and value impact
Permitted work typically contributes more to appraised value than unpermitted work. Clear permit records help the appraiser verify improvements and may reduce uncertainty in adjustments. If you added or converted space, an appraiser will consider whether it is permitted and consistent with local definitions of living area.
If you have an ADU, document permits, size, and any rental history. This can influence both the sales comparison and, in some cases, the income approach.
Appraised value vs assessed value vs a CMA
- Appraised value is the lender-focused opinion of market value for your loan at a point in time.
- Assessed value is used for property taxes and may be influenced by state rules. It often differs from market value.
- A CMA is prepared by your agent to guide pricing and strategy. It reflects current market activity and can include active, pending, and sold comparables.
These numbers serve different purposes. It is common for them not to match.
If the appraisal comes in low
Stay calm and review your options with your agent and lender.
- Ask your lender about a reconsideration of value. Provide additional recent comparables and correct any factual errors.
- Renegotiate the price or credits with the other party.
- Bring extra cash to bridge the gap if that fits your plan.
- Use any appraisal or loan contingencies to cancel if allowed by your contract.
Reconsideration of value
Most lenders allow a formal reconsideration submission. You or your agent can provide better comparables, proof of permits, and corrections to material errors. This process is not a guarantee of a higher value, but it is a standard recourse when there is strong evidence.
A simple preparation checklist
For sellers
- Gather permits, receipts, and a concise upgrades list with dates and contractors.
- Create a one-page property features sheet that highlights unique attributes.
- Ensure all spaces are accessible and well lit for the inspection.
- Tidy landscaping and show how outdoor areas function for everyday use.
For buyers
- Confirm appraisal and loan contingency timelines with your agent and lender.
- Save MLS sheets and public record data for the best comps.
- Prepare a short summary that explains why your contract price is supported by the market.
The bottom line
Appraisals in Los Altos are shaped by high prices, limited comparable sales, and the outsized impact of permits, layout, and lot quality. With preparation and the right strategy, you can set expectations, avoid delays, and respond effectively if the value is not where you hoped. If you want a data-driven plan for listing, buying, or navigating a valuation gap, connect with Payne Sharpley to align your next steps.
FAQs
During a Los Altos home appraisal, what does the appraiser look at?
- The appraiser reviews condition, layout, living area, lot utility, upgrades, permit status, and site influences, then compares the home to recent nearby sales.
Why might a Los Altos appraisal come in below the contract price?
- Rapid price movements, limited recent comparable sales, off-market dynamics, or unpermitted work can make it hard to support a higher contract price with closed comps.
Can I challenge a Los Altos appraisal, and how?
- Ask your lender for a reconsideration of value and submit stronger comparable sales, proof of permits, and corrections to any factual errors in the report.
What are my options if the appraisal is low on my purchase?
- You can seek a price reduction or credit, supply new comps for reconsideration, add cash to bridge the gap, or cancel if your contingency allows.
Should I list my home at the appraised value?
- Not necessarily. Appraisals serve the lender’s needs at a moment in time, while list price strategy considers current activity, competition, and your timing goals.
Do permits and ADUs affect appraised value in Los Altos?
- Yes. Documented, permitted improvements and a permitted ADU typically support value more effectively than unpermitted work.
How do schools factor into Los Altos appraisals?
- Appraisers can consider school district boundaries and assigned schools as market influences, using neutral, factual data as part of overall analysis.
How long does an appraisal take and who pays for it in Los Altos?
- Scheduling to report delivery often takes several days to 1–2 weeks, and the buyer’s lender orders it with a fee that is typically paid by the buyer.
