Whether you’re selling your home, refinancing, or looking to borrow against your equity with a home equity loan or home equity line of credit (HELOC), you’ll typically need an appraisal. An objective professional assessment of your home’s value is key to determining its sale price or your equity level.
Before the pro steps foot on the property, it’s a good idea to know what you’re in for, what hurts a home appraisal (and what helps), and how you can prepare for the visit.
Table of Contents
- Key Points
- • A home appraisal is an unbiased professional determination of a home’s market value.
- • A visit from an appraiser is often required for home sales, refinances, and home equity loans and lines of credit.
- • The appraiser evaluates the property’s general condition, curb appeal, interior features, and key systems (like HVAC, plumbing, and electrical), and compares the home to recent sales of similar properties (“comps”) in the neighborhood.
- • Factors that negatively affect an appraisal include structural weaknesses, deferred maintenance (like leaky faucets or peeling paint), and safety issues.
- • Homeowners can prepare by tidying up, making minor repairs, and having documentation related to recent, significant improvements or updates available for the appraiser.
What Is a Home Appraisal?
A home appraisal is an unbiased determination of your home’s value done by a trained, credentialed professional. You might request an appraisal before putting your home up for sale so that you can set the price appropriately. Your buyer’s lender will also likely require an appraisal as part of the mortgage loan process. If you apply for a mortgage refinance or try to get equity out of your home with a home equity loan or line of credit, your lender might require an appraisal before approving you.
Note that there is a difference between an appraisal and a home inspection, although both usually involve someone visiting your home and looking around. The difference isn’t so much what is a home appraiser looking for versus what an inspector is examining. Both are looking at things like your roof, foundation, heating and air conditioning, and other basics. But the appraiser is laser-focused on determining your home’s value, while an inspection — usually requested by a prospective buyer of your home — focuses on determining what condition the home is in.
If your home is being inspected in preparation for a sale involving a loan backed by the Federal Housing Administration (FHA), the appraisal will include some FHA inspection requirements that are specific to FHA loans. These focus on the health and safety of your home. It might feel like the appraiser is also an inspector, but your buyer may still request an inspection to more thoroughly evaluate the home’s condition.
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Why a Home Appraisal Matters
It’s in your best interests as the homeowner to ensure your home appraises well. You can use an appraisal to price your home, often in consultation with a knowledgeable real estate agent. If you’ve owned your home for many years and prices have gone up significantly, having an appraisal can be an especially good wake-up call.
Once your property has found a buyer, the results of the appraisal requested by a lender (and paid for by the buyer) are critical: If the home appraises below the agreed-upon purchase price, your buyer might not be able to get a mortgage loan, even if they have mortgage preapproval for a loan of a certain size based on their financials.
A home appraisal also matters where your own refinancing and equity-based lending are concerned. Your home equity is your home’s market value minus whatever you still owe on your home loan. So the higher the appraised value of your home, the larger the dollar value of your equity. Your credit ceiling in a HELOC or the amount you can borrow with a home equity loan will be based in part on this equity.
With all that in mind, let’s run through what exactly an appraiser is going to be looking at during the visit.
Complete Home Appraisal Checklist
An appraiser gets 150 hours of training in order to evaluate a residence. Here’s a peek at what your evaluator will be considering when doing your home appraisal.
1. General Property Information
Some of the information the appraiser will compile is available from local government sources and the listing service that agents use to record details about properties for sale. The appraiser will fill out the Uniform Residential Appraisal Report or a similar document, listing details about the neighborhood, its home values and other characteristics, as well as details on “comps” — comparable homes that have sold recently and their sale price. The zoning of the property, whether it’s in a flood zone, and whether water and sewer services are public or private (i.e., the property relies on a well and septic system) are also factored in.
2. Curb Appeal and Exterior Condition
The appraiser will usually visit your home and look at everything from your driveway surface (is it in need of resurfacing?) to your foundation (is it cracked or is there evidence of settling?) to your roof condition. These elements will likely be more important than your landscaping, but a well-maintained exterior — including everything from mature, well-pruned trees and shrubbery to nicely painted shutters and clean siding — is a factor in the home value estimate.
3. Interior Condition
Inside the home, the overall square footage and number of bedrooms and bathrooms are important elements. Whether your attic or basement are easily accessible and finished are also factors under consideration.
4. Kitchen and Bathrooms
In the kitchen, the condition of appliances is a key factor. The appraiser will be looking at everything from whether or not you have a garbage disposal to the age of your dishwasher. In bathrooms, ventilation, evidence of lingering dampness, and the condition of your floor and wall tile will be important.
5. HVAC, Electrical, and Plumbing Systems
You might like central air conditioning, and — no surprise — so do appraisers. Your home will score better if the heating and air conditioning systems are of recent vintage, and your electrical and plumbing systems are well maintained.
6. Safety and Code Compliance
An appraiser is not a building inspector, but the overall safety of your home will be addressed in the appraiser’s report. Conditions that could “affect the livability, soundness, or structural integrity of the property” will be noted.
7. Additional Features That Add Value
Whether or not your home has a garage or carport will be noted. And if they are in good repair, outbuildings, a patio, a pool or sports court, and other exterior features can add value. A fireplace (indoors or out) and a deck are other nice-to-haves from an appraiser’s point of view — again, provided they are in good condition.
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What Can Negatively Affect a Home Appraisal?
The appraiser will consider whether there are any easements — such as buried utility pipes or public pathways on your property — or other factors that might adversely affect the property value. Having power lines traversing overhead or being located on a busy road might be a negative, for example.
Anything that suggests structural weaknesses in the home will also have a negative impact. This might include cracks in the foundation, sagging or badly slanted floors, or doorframes and window frames that are askew. Evidence of termite damage or mold are also serious negatives.
How to Prepare Your Home for an Appraisal
Tidying up your home and doing some light maintenance tasks can help ensure your property shows up in the best light. Right before an appraisal isn’t the time to undertake a kitchen renovation. But it’s the perfect opportunity to mow your grass, trim your shrubbery, and relegate a few shelves’ worth of dusty knick knacks to bins in the garage.
Walk through your home and listen for water dripping. Nothing says “deferred maintenance” like a leaky faucet, so get that fixed. You might even touch up a little peeling paint or have the home’s siding power-washed.
It’s also helpful to have on hand any documentation of improvements you’ve made on your home. If you put in a new, energy efficient heat pump just two years ago, that will likely reflect well on your home’s value. Ditto a new roof, water heater, septic tank, or swimming pool pump. It can’t hurt to show the appraiser a folder of receipts documenting the newness of any key systems or appliances.
The Takeaway
What is a home appraiser looking for? The home appraisal checklist includes the property’s size and general condition, as well as special features. But an appraiser also evaluates systems, looks for repair needs, and compares your home to others that have recently been on the market.
If your home is being appraised, take the time to make minor repairs and do some serious tidying up. Then get out of the appraiser’s way and wait for feedback. If a home you’re selling appraises for the agreed-upon price, your buyer is one step closer to a mortgage.
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FAQ
What do appraisers look at the most?
Some of the things appraisers look at the most are things a property owner has little control over: the location and value of similar homes that have sold recently. Appraisers also take a good look at lot size, building size, and number of bedrooms and baths. But upkeep issues — everything from landscaping to how recently the HVAC was updated — are also important and opportunities to make improvements that drive value.
What shouldn’t I say during a home appraisal?
Avoid saying anything to a home appraiser that aims to sway their opinion or criticizes their perspective. Don’t discuss home sales in the neighborhood, values assigned to your home by real estate web sites, and home repairs you’ve done as a self-taught carpenter/drywall installer/tile layer. Stick to answering any questions the appraiser asks succinctly and honestly. If you have receipts documenting recent updates to the home’s mechanicals or appliances, offer those for the appraiser’s review.
How long does an appraisal take?
A home appraiser’s visit will usually take between one and three hours, depending on your home’s size and complexity. The appraiser’s report should arrive within a week to 10 days afterward.
Can you challenge a low appraisal?
If you are a homebuyer getting an appraisal as part of the mortgage process, reach out to your prospective lender if the appraisal comes in low. It may be possible to ask for a second look, but the lender would likely need to be involved in this request.
Do appraisers consider neighborhood or comps more?
Both neighborhood and comparable home characteristics are important to an appraiser trying to put an estimated value on a property. Ideally an appraiser is looking at homes that are in a similar neighborhood within the town or area of the home being appraised. From there, the goal is to look at homes of similar age, size, and with comparable characteristics and special features if possible.
Photo credit: iStock/kate_sept2004
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