11 factors that affect your home appraisal

When it comes time to sell your home, there’s a long list of things to do to before putting your home on the market. From cleaning up to fixing what’s broken, there’s a lot you can do to make your home more attractive to prospective buyers. But before your home hits the market, the first person you want to impress is the home appraiser.

A home appraisal will determine how much your house is worth. It’s a crucial step of the home selling process because it helps set the listing price for your home, and helps the homebuyer’s lender validate financing for the purchase. In most cases, a home appraisal is a one-and-done deal. (Typically, only a buyer can request a second appraisal while only a lender can insist upon one.)

Here, we’ve rounded up a list of common factors that may hurt your home appraisal and drive down your home’s value. While some factors may be beyond your control, many are not, and knowing what to look for can help you maximize your home’s appraisal.

What do home appraisers look for?

A home appraisal is an unbiased, expert opinion of how much your home is worth. It’s completed by a professional home appraiser who is qualified and certified in your state.

For consistency, home appraisers use a “Uniform Residential Appraisal Report.” This standard report helps eliminate bias and verifies that all inspectors play by the same rules. A home appraisal looks at:

• The year the home was built
• How many stories the home has
• Roof materials
• Floor and wall materials
• Bed/bath total
• Square footage
• Foundation
• Basement and attic features
• Off-street parking, driveway, garage, etc.
• Appliances
• Neighborhood
• Housing market
  

Home appraisers use a “sales comparison” approach, which means they choose three comparable sales in the local market and outline how your house is similar or different from those properties. No two houses are exactly alike, so these comparisons help establish a more consistent baseline for evaluating properties in the same area.

Find out how long an appraisal takes.

What factors impact a home appraisal?

1. Curb appeal

They say don’t judge a book by its cover but the axiom doesn’t follow for houses. Appraisers judge how your home looks from the street because that’s a factor potential buyers will consider. A very attractive home will attract more interest on the market, that’s just a fact.

If your home is a little run down, fix the shutters, paint the exterior, and make your house look as nice or better than the other homes in your neighborhood.

Learn what not to fix when selling a house.

2. Home location

Every appraisal assesses location first. You can’t compare the value of a home in rural area to one in a bustling city.

Appraisers will also consider how close your home is to neighbors, how near it is to the street, neighborhood amenities, and schools, and the quality of roads. If you live within walking distance to a train station would positively impact the appraisal, while a house next to the train tracks would have less appeal.

Likewise, proximity to poorly maintained, vacant homes or foreclosures may also hurt your home appraisal. As major eyesores or potential settings for crime, vacant homes tend to pull down property values of homes nearby. This is out of your control, but something to keep in mind.

3. Deferred maintenance

One of the biggest factors that reduces a home’s appraised value is deferred maintenance. Maintaining a home is expensive and time-consuming, but neglecting standard maintenance can become a costly problem.

A roof leak that might have cost several hundred dollars to fix last year could expand to damage the ceiling and drywall, resulting in thousands of dollars of damage. Neglected maintenance that may get passed off to a new owner can bring down the appraisal value of your home.

Before getting an appraisal, it’s a good idea to have a home inspector go through your house first to point out maintenance you may have missed or broken items that need fixing.

4. Home size

Your home’s square footage contributes to your home’s appraised value. But not only do appraisers look at the number of square feet, they also examine how it’s distributed.

You may have been in some odd homes in your life and, chances are, some of those odd features can negatively impact an appraisal. For instance, homes built in the 1930s and 1940s often connect multiple bedrooms without a hallway in-between, reducing privacy. Colonial homes may have strangely placed walls or tiny rooms that seem to serve no purpose to the modern homeowner. Quirkiness may not help an appraisal.

The number of bedrooms and bathrooms will also impact the appraisal. Too few bedrooms can alienate some buyers, for example. A one or two-bedroom home may not be desirable in a suburban neighborhood where potential buyers are looking for a home to start a family.

Before making renovations to add a bedroom, you should know that according to the International Residential Code (IRC) that must be followed by appraisers, anything less than 70 square feet cannot count as a bedroom.

For bathrooms, an appraisal will compare the number of full and half baths in your home to the neighborhood. If all the homes around you have two full baths and you only have one, that will bring down the value of your home appraisal.

5. Structural strength

A well-built house is worth more than one that’s about to fall down. Home appraisers pay close attention to a home’s structure and construction, identifying the exact types of materials used to build the home. A home that’s been built or updated with modern materials will earn a higher appraisal than one that hasn’t been updated in 50 years.

Newer homes with newer foundation materials and techniques tend to be valued higher. Homes with updated, safe, and energy-efficient roofs and windows will also hold higher value.

Learn more about selling a house in poor condition.

6. Dated or undesirable finishes

Research shows that Americans spend about $400 billion every year remodeling their homes. Remodels can upgrade worn-out materials, finishes, and surfaces, or update a home to a modern style.

Many potential buyers appreciate the craftsmanship of older homes, but they’d still like to see that it’s well-preserved and updated. Appraisers note value for high-end kitchen appliances, high-quality countertops, or brand new faucets. Likewise, they may dock value for white appliances or odd finishes like polka dot countertops.

When you list your home with Orchard, we can help make repairs and upgrades to your home, so it sells for top-dollar.

7. Overly personalized renovations

Your taste may not be everybody else’s taste. Many people love The Beatles, but not everyone would paint a mural of John, Paul, George, and Ringo on the wall of their finished basement. Many people enjoy a nautical theme, but not everyone would turn all of the sinks in their house into different kinds of sea shells. 

If you’re making renovations in a home you someday plan to sell, keep them simple and keep the paint colors neutral. Not only will overly personalized renovations negatively impact your home appraisal, but complicated projects may take a long time to finish, and half-done projects will hurt the final value when your home hits the market.

8. Closets and storage

Closets in homes built 50 or more years ago tend to be smaller, and these homes usually have less storage space overall. If home appraisers notice clutter, they’ll deduce that your home doesn’t have enough closet or storage space.

Storage is important to many buyers. A large walk-in closet, a re-finished and spacious garage, a finished basement, and well-placed closets throughout a home can all positively impact a home appraisal. On the other hand, a lack of clear storage space can hurt.

9. Comparable properties

Home appraisers use the other homes in the neighborhood as a baseline when assessing your home, and comparable properties, or real estate comps, can sometimes hurt your appraisal.

If your neighbor’s house is almost identical to yours, but sports a new coat of paint and updated siding, a home appraiser will see it as more valuable than your home.

Sometimes, an appraiser compares your property to an outlier, like a home that sold between relatives for a lower cost or sold at foreclosure. That can negatively impact your home appraisal.

10. Market conditions

A home appraiser doesn’t just consider your home’s value compared to similar properties or with historic sale data. They also analyze the market at large to forecast supply and demand. They’ll examine whether sale or leasing prices are increasing or decreasing in your area, whether foreclosures rates and vacancies are dropping or rising, and other similar factors. This analysis not only helps determine appropriate value, but aims to show future benefits of ownership to potential buyers.

If you’ve received any offers above asking price in your area, let your home appraiser know — it might just help your appraisal value.

11. Appraiser experience

The appraiser doesn’t work for the seller in most instances. Their client is your potential buyer’s lender, so you can’t choose who visits your home. Still, they’re intended as an impartial third party to best assess your home’s value.

Nonetheless, appraisers are human and get better with time and experience. Sometimes an appraiser works outside a regular coverage area and isn't as familiar with the market. When an appraiser has less experience, they may be unnecessarily harsh. If you’re unhappy with an appraiser or feel they didn’t understand your market, you can request a copy of the appraisal from the buyer and file a dispute with the lender. (You can get a free home valuation from the experts at Orchard.)

What factors won’t impact a home appraisal?

There are a number of factors that negatively affect home appraisal but if you’re concerned about a few specific items, rest assured there are a number of factor’s that won’t impact a home appraisal. These include:

• Race of the seller and racial composition of the neighborhood: Home appraisers are forbidden from discriminating based on race.
• House paint color: Paint is easy and relatively inexpensive to change; finishes are not.
• Basements: Even finished basements should not be factored into the total living area.
• Clutter or mess: Clutter is not supposed to impact a home appraisal, so don’t worry about the odd stray t-shirt on the floor. Keep in mind, however, that sifting through a very messy house may add time to the appraisal, raise additional questions, or make an appraiser look more closely for faults. 

Here's a home appraisal checklist to help prepare