What Does An Appraiser Look For? 23 Things That Influence Home Value (2022)

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So you’ve found the perfect house, you’ve negotiated purchase terms, you’re all set for inspections, and there’s nothing else standing between you and the closing table — or is there?

Even if you’re feeling comfortable with the asking price of your intended new home, your mortgage lender needs to make sure that you aren’t overpaying for a house that isn’t really worth what they’re about to give you. That means it’s time for an appraisal.

“When buyers finally decide on the right house, they’ve already seen a few homes,” says top Albuquerque real estate agent Tracy Venturi.

(Video) What Real Estate Appraisers Look at During an Appraisal!

“In their mind, they go, ‘Wow, this is priced similarly in the range that I’m looking at, and this one is the clear gem for us.’”

In her 20 years of experience helping buyers find the perfect home, Venturi has seen her fair share of appraisal reports. Unless a buyer is paying cash in full, one of the most important components of any mortgage-contingent purchase agreement is the appraisal.

What exactly is a certified appraiser looking for, though?

With the help of Venturi and Rodman Schley, MAI, SRA, President of the Appraisal Institute, we’re spelling out 23 factors that influence your soon-to-be new home’s value.

What Does An Appraiser Look For? 23 Things That Influence Home Value (1)

What does an appraiser look for?

Schley explains that an appraisal report usually involves a description of the property, details about its location, an analysis of use, a review of nearby similar properties, and, finally, information regarding local real estate trends.

We’ll elaborate on those specifics shortly, but now is a good time to clear up a common misconception: An appraiser is not walking into a home without any details about the pending purchase.

“One of the things a lot of people don’t know is that the appraiser gets a copy of the contract,” shares Venturi. “They’re not trying to sabotage the deal; they’re just trying to make sure it makes sense for the buyer, the seller, and the lender.”

(Video) What Real Estate Appraisers Look at During an Appraisal!

It may be helpful to think of an appraiser as a neutral fourth party. They’re going to assess the property according to standardized criteria, and then produce an honest report based on facts and observations.

“Mortgage appraisals are not technically provided to confirm a sales price,” says Schley, noting that the purpose of an appraisal is primarily to make sure that neither the buyer nor the lender are about to enter into questionable financial agreement.

Now that we’re all on the same page, let’s get down to business on what an appraiser is looking at in order to produce their report.

Neighborhood attributes

The appraisal process begins with a big-picture overview.

  • Type of neighborhood. Is the home in an urban, suburban, or rural location?
  • Neighborhood growth. Is the area growing in size? Is there steady demand for homes?
  • Neighborhood land use. An appraiser evaluates how the property is being used, be it residential or commercial, and whether it’s a single- or multi-use unit (for example, is there a retail space on the ground floor and an apartment above? Is the building a mix of office and residential units?)
  • Housing trends. In short, what’s going on in the area? Appraisers will take note of whether residents are renting, buying, renovating, what types of new properties are being built, and so on.

Home attributes

Here’s where things get personal about the home in question.

  • Type of house. This can refer to a single-family home, a townhouse, a unit in a condominium complex, a mixed-use space, or something else entirely.
  • Design and style. An appraiser will consider the architectural style of the home. Think modern, ranch, craftsman, colonial, mid-century, and so on.
  • Build year. The age of a home can influence value, particularly if it’s newly constructed or historic.
  • Construction materials. Here’s where the appraiser notes everything from siding (brick, vinyl, concrete, composite…) to flooring (hardwood, title, carpet, laminate…), to trim and wainscoting (wood, plastic, metal…).
  • Square footage. How large is the home?
  • Number of bedrooms. These will be counted in accordance with state regulations on what defines a bedroom.
  • Number of bathrooms. Full baths and half baths both earn credit.
  • Foundation type. Appraisers look at whether a home is on a slab, has a crawl space, or a full basement.
  • Basement details. If the home does have a basement, an appraiser will take into account whether the space is finished or is closer to something out of a horror movie.
  • Attic details. Likewise, if the home has an attic, the appraiser will evaluate the size and condition of the space.
  • HVAC details. How is the home heated and cooled? How old is the system?
  • Car storage. This refers to proper parking areas, not how many vehicles could theoretically fit on the front lawn. Garages (attached or detached), carports, and driveway will be evaluated — as well as the driveway surface type (pavement, gravel, dirt, and so on).
  • Appliances. An appraiser will take note of present appliances, which may include: refrigerator, stove, oven, dishwasher, washer and dryer, and others.
  • Features and amenities. What “extras” does the home have? This is where the appraiser looks for things like fireplaces, outdoor spaces (porches, patios, balconies), fences, pools, extensive landscaping, detached buildings for storage or workspace, and more.
What Does An Appraiser Look For? 23 Things That Influence Home Value (2)

Home condition

Let’s clarify another common misunderstanding: An appraisal is not the same thing as a home inspection.

“They’re two different animals,” says Venturi. “A lot of times, [buyers] think that the appraiser is going in and checking all the functionality of things, when really they’re looking at the big picture.”

(Video) What do appraisers look for? | Real estate appraisal | How to prepare for an appraisal | Vallejo CA

For a full report on the nitty gritty details of a property’s condition, performance, and areas of concern, a home inspection is vital; don’t expect to further negotiate a flooring allowance or electrical repair based on an appraisal report.

That said, an appraiser will take a look at the following:

  • Repair needs. Again, this won’t be a deep-dive into what is wrong, but if an appraiser sees a clear need for repairs, they’ll note the deficiencies. This could mean anything from a deteriorating door frame to a cracked toilet tank.
  • Renovation. Appraisers will take into consideration updates that have been made to the property. Similarly, if a house built in 1976 is still sporting its original kitchen, that won’t go unnoticed.
  • Major damage. This is where an appraiser will check for expensive problems with the home. Issues like water damage, electrical hazards, pest infestations, and other safety or financial hazards.
  • Livability. Many homes are listed on the market as “move-in ready,” implying that the next buyer can move in without first having to make repairs or major updates. An appraiser will observe the home for any issues that may affect comfort and safety.
  • Neighborhood conformity. This isn’t to say a home will be penalized for having a bright pink front door — to each their own — but appraisers will compare the house against its neighbors in terms of style, condition, construction, use, and utility.

Determining value with comparables

Aside from using the sales contract as a starting point for their valuation, once an appraiser has reviewed a home and the neighborhood, it’s time for comparative research.

Appraisers look at recently sold nearby homes that are similar to the one in question. Frequently referred to as “comps,” comparable properties are a key aspect of most real estate transactions.

Agents use comps to help sellers determine a listing price, appraisers use comps to help confirm market value, and prospective buyers often take comps into account without even realizing it. If you’ve ever said something along the lines of, “This one is nice, but the house two streets over is the same price and has a three-car garage,” then you’ve considered comps!

For more formal purposes, comps are chosen based on:

  • Location
  • Year built
  • Square footage
  • Number of bedrooms and bathrooms
  • Bells and whistles (such as a pool, renovated kitchen, hardwood flooring; anything that can be considered an upgrade or desirable attribute)

The date of the last sale is also important. The most accurate comparables tend to be recent and nearby sales — ideally within the last few months and within a mile or two of the home in question — but depending on location and market conditions, appraisers may have to be flexible with their search parameters.

(Video) How to MAXIMIZE your Appraisal - Home Appraisal Tips

“Not every neighborhood is cookie-cutter,” explains Venturi. “Sometimes [appraisers] have to deviate and go back a year, or five miles, or across town; but they’re looking backwards to find similar properties to justify the current value of the house.”

What Does An Appraiser Look For? 23 Things That Influence Home Value (3)

What buyers should know about appraisals

To ensure the appraisal is truly an independent opinion, the lender will order an appraisal from an appraisal management company or from their approved list of independent appraisers, and the buyer will later pay for it as part of the closing process.

If you want to be more involved, don’t be shy about asking your lender their appraiser independence protocols and how they go about ordering an appraisal. A trustworthy appraiser will be professionally designated by a formal appraisal organization — such as the Appraisal Institute — and as long as your lender’s policies permit, you can actually be present during the appraiser’s inspection.

“Appraisers welcome information,” says Schley. He encourages buyers to check with their lender and attend the appraisal appointment if possible. Once on site, feel free to observe the process and speak up if you have additional information that may be pertinent to the appraiser’s reporting; and be sure that enough time is spent evaluating the home’s assets and upgrades.

In short, don’t be afraid to get involved. After all, you’re the one taking out a mortgage to purchase the home — it’s perfectly fine to double-check credentials and make sure there are no oversights.

Header Image Source: (Max Vakhtbovych / Pexels)

FAQs

What is the biggest factor in a home appraisal? ›

Livable space is what is most important to buyers and appraisers. Bedrooms and bathrooms are most highly valued, so the more beds and baths your home offers, the more your home is generally worth.

What factors are considered when valuing a property? ›

The main factors in determining the value of a property are the selling price of other properties in the area, and the price at which the property in question was previously sold for. The advice of estate agents is invaluable in determining a property's estimated market value, and what its price tag should be.

What are the four factors that influence value? ›

The current and future importance consumers place on the four factors of value (Desire, Utility, Scarcity, and Effective Purchasing Power) represents Demand and Supply of the product or service.

What factors affect the demand for housing? ›

The primary factor influencing demand for housing is the price of housing. By the law of demand, as price decreases, the quantity of housing demanded increases. The demand for housing also depends on the wealth of households, their current income, and interest rates.

What will fail a home appraisal? ›

Anything from deferred maintenance on the home to cool market conditions can lower a home appraisal. Recent sales in the neighborhood will help determine the market value of the home. So if sales have been slow, or if sellers have been accepting lower offers, the value of all homes in the area can be affected.

What brings down a home appraisal? ›

Updating appliances or any major systems, like plumbing, electrical or HVAC, can be costly, so if yours are outdated, it could affect the overall value of the home. And if the interior hasn't been changed for decades, it may not appeal to buyers, which can also cause the value to decrease.

What are the 3 most important factors in real estate? ›

The three most important factors when buying a home are location, location, and location.

Does yard affect appraisal? ›

The curb appeal and general landscaping of the home also impacts the home appraisal value. If your home lacks curb appeal it could lower the value of the home. On the other hand if your yard is filled with hard to care for plants and a hazardous dead tree this could also negatively affect your home appraisal value.

What is the most important factor that influences market value? ›

Some of the main factors that can influence a property's value include:
  • Location. The location of a property is the most obvious factor that affects how much a property is worth. ...
  • Supply and demand. ...
  • Interest rates. ...
  • Economic outlook. ...
  • Property market performance. ...
  • Population and demographics. ...
  • Size and facilities. ...
  • Aesthetics.
5 Apr 2021

What is the most important thing when selling a house? ›

Arguably the most important step before selling your property is being able to bid it farewell and no longer see it as a home. Focus on your future rather than the past, and make peace with your property as a product to be marketed and sold.

How much does age of house affect value? ›

When thinking about what type of home if right for you, it is important to note that older homes typically sell for significantly less than a newer home would. In fact, according to a recent article in the Wall Street Journal, new construction comes at a 10-20% premium over older homes.

What do house prices depend on? ›

The housing market is influenced by the state of the economy, interest rates, real income and changes in the size of the population. As well as these demand-side factors, house prices will be determined by available supply.

What are the 4 factors that affect housing? ›

4 Primary Factors that Influence the Price of Your Home
  • Supply and Demand. Like with any good or service, the housing market relies on supply and demand. ...
  • Location and Neighborhood Comps. ...
  • Size and Layout. ...
  • Age and Condition.
13 Jul 2021

What makes house prices go up? ›

Growing demand usually means higher house prices. There have also been times when house prices have increased a lot just because people think prices will continue to rise. This is called a housing market bubble. Bubbles are always followed by housing market crashes when house prices fall sharply.

How does location affect property value? ›

Location and Accessibility: Location is typically accepted as a key factor when it comes to a property's value. A similar property in a different area will generally command a different price simply because of its location.

What hurts an appraisal? ›

Any unrepaired or ongoing structural damage can hurt your appraisal. Home appraisers are training to look for telltale signs of structural damage, such as cracks in the walls or flooring.

How do I get the highest appraisal on my house? ›

How to Increase Home Value for Appraisal
  1. Improve your house's curb appeal. ...
  2. Mow and clean up your yard. ...
  3. Examine the exterior of your home. ...
  4. Document all of your home upgrades. ...
  5. Give your home a deep cleaning. ...
  6. Patch up any imperfections. ...
  7. Let the appraiser do their job. ...
  8. Be open to the appraiser's questions.

Does cleanliness affect a home appraisal? ›

The short answer is “no, a messy home should not affect the outcome of an appraisal.” However, it's good to be aware that there are circumstances in which the state of your home can negatively affect its value.

What negatively affects an appraisal? ›

What negatively affects a home appraisal? One of the big things that can have a negative affect is the age and condition of the home's systems (HVAC, plumbing) and appliances. If the local market is declining, that'll also hurt your home's appraised value.

What a home appraiser should not say? ›

Just keep your communication to the appraiser about the facts of the home and neighborhood, how you priced the house, and any other relevant information you think the appraiser should know. And remember, don't discuss value. Don't pressure the appraiser to 'hit the value' and you'll be fine.

Do appraisers turn on faucets? ›

Appraisers flush toilets, turn on all faucets and ensure that both hot and cold water are working. The water heater must be in working order and strapped according to local code.

What is the most important factor that makes a good home? ›

1. Location, location, location. Perhaps nothing is more important than the three L's, and there's a reason why it's said three times. Location is extremely important when it comes time to sell.

What is the 5 rule in real estate investing? ›

The rule states that a homeowner should expect to spend, on average, around 5% of the value of the home (per year), on the costs we mentioned above. Here's how it should go (in an ideal world): Property taxes should not amount to more than 1% of the value of the home.

What are the general influencers of real property value? ›

Which four characteristics are required to establish value in real estate? Demand, utility, scarcity, transferability or "D-U-S-T" or desire,utility, scarcity, and effective purchasing power.

Will an appraiser flush toilets? ›

An appraiser may try every light switch and flush toilets to make sure everything is in working order, so fix any issues with those before your appraisal date. Have your air conditioning system cleaned and checked, as well as any other mechanical equipment you have in your home.

Do appliances count in a home appraisal? ›

Appraisers will check the materials and condition of the windows and doors, flooring, plumbing and electrical systems, the number and quality of appliances, the kitchen, bathroom, and all other important parts of the home. He or she will also check for health and safety issues, such as fire escapes and handrails.

What upgrades to tell appraiser? ›

5. Keep a List of Repairs and Upgrades
  • Loose Floor Boards.
  • Leaky Roof.
  • Functioning Door Bell.
  • Rain Gutters.
  • Replace Bathroom Caulk.
  • Dripping Pipe or Faucet.
4 Jan 2018

What should you not fix when selling a house 2022? ›

Your Do-Not-Fix list
  • 1) Normal wear and tear. ...
  • 2) Windows and window accessories. ...
  • 3) Minor HVAC, electrical, or plumbing issues. ...
  • 4) Partial upgrades to bathrooms or kitchens. ...
  • 5) Carpet or flooring. ...
  • 1) Light landscaping to increase curb appeal. ...
  • 2) Neutral paint. ...
  • 3) Anything glaringly broken.

What not to do before you sell your house? ›

8 top home selling mistakes you should avoid
  1. Underestimating the costs of selling. ...
  2. Setting an unrealistic price. ...
  3. Only considering the highest offer. ...
  4. Ignoring major repairs and making costly renovations. ...
  5. Not preparing your home for sale. ...
  6. Choosing the wrong agent or the wrong way to sell. ...
  7. Limiting showings.
9 Jul 2022

What should I fix before selling my house? ›

Repairs Worth Making Before You Sell
  1. Paint. Paint is one of the cheapest, easiest ways to update the look of your home before you list it. ...
  2. Exterior. The exterior is the first thing buyers will see, so you want it to look good. ...
  3. Kitchen. ...
  4. Bathroom. ...
  5. Lighting. ...
  6. Refinishing Hardwood Floors. ...
  7. Functionality. ...
  8. Pre-Sale Inspection.
27 Jun 2016

How do appraisers adjust for age of home? ›

Effective age. Effective age is the age indicated by the condition and utility of a home. Effective age takes into consideration the wear and tear a home experiences as it relates to a loss in value, which may be attributed to physical wear and tear, functional issues and external factors that impact value.

Does lot size affect home value? ›

Lot Size As a Factor in the Value of Your Home

As a general rule, homes on larger lots have a higher property value than similar houses on smaller lots in the same area. How much higher may depend on other neighborhood factors. The location makes a difference in how valuable a larger plot of land is to home buyers.

What is a good house age? ›

There is an ideal age to buy your first home, and that's between the ages of 25 to 34. As you enter your golden years and (hopefully) retirement, the equity in your home will become even more important to your financial health, especially should you need to refinance to cover any gaps in your retirement savings.

Will house prices drop in 2022? ›

This could in turn push average mortgage rates to around 4% (while still historically low, that is more than double the 1.6% rate recorded at the end of 2021) Based on this data, Capital Economics has forecast house prices to rise throughout 2022, before falling by 5% in 2023.

Does number of bedrooms affect house price? ›

The more bedrooms your home has, the higher the price it can command. Estate agents set listing prices by looking at what other similar homes are selling for in the same market, and the number of bedrooms is an important characteristic used to compare two properties.

What makes house prices go down? ›

The main factors that cause a fall in house prices involve: Rising interest rates (making mortgage payments more expensive) Economic recession / high unemployment (reducing demand and causing home repossessions). Fall in bank lending and fall in availability of mortgages (making it difficult to buy).

What factors affect appraisal value? ›

What Does a Home Appraiser Look At? A property's appraisal value is influenced by recent sales of similar properties and by current market trends. The home's amenities, including the number of bedrooms and bathrooms, the floor plan's functionality, and the square footage are also key factors.

Which factor would negatively influence demand in real estate? ›

The absence of favorable government policies, bank's interest rates, and unfavorable economic conditions may create an adverse effect on its demand. Therefore, these are factors and constraints to the growth of real estate.

What are house prices doing in 2022? ›

Expecting a 4.5% increase in average house prices during 2022, as quoted in the Sunday Times, 5th December 2021.

What will happen to house prices in 2023? ›

Our new, higher, interest rate forecasts mean that we now expect house prices to fall marginally in 2023 and 2024. While there are risks on both sides, our base case is that prices drop by 5% overall, reversing a fifth of the surge in house prices since the pandemic began.

Will house prices go down in 2023? ›

All survey respondents said to expect home-price deceleration in 2023. The U.S. housing market will shift in favor of home buyers by the end of 2023. That's according to 44% of the 107 economists and housing experts surveyed by real-estate company Zillow.

What are 4 risks that may impact a real estate agency? ›

Here are some common risks that real estate agents face, and how to protect against them:
  • Omission. Everything included in the sale of a home needs to be itemized so that all parties are on the same page with the same expectations. ...
  • Failing to deliver service. ...
  • Wrongful discrimination. ...
  • Accidents.
11 Jul 2014

How much value does remodeling add to a home? ›

More homeowners may be remodeling, but those that do high-end projects are seeing less value in those remodels. The average payback in a home's resale value is 56 percent of the cost of the remodel.

Does number of bedrooms affect appraisal? ›

Number of Bedrooms

The number of bedrooms in your home will also increase your home appraisal value. The home appraiser will compare your home to other homes in the area with the same number of bedrooms to make a value comparison.

Does cleanliness affect a home appraisal? ›

The short answer is “no, a messy home should not affect the outcome of an appraisal.” However, it's good to be aware that there are circumstances in which the state of your home can negatively affect its value.

What is the most important factor in determining the offer price of a home? ›

Time on Market is a key factor that informed buyers take into consideration when looking at a real estate listing. The best approach to determining the appropriate listing price is to start with recent sales of comparable properties, as close to the subject property as possible.

What upgrades to tell appraiser? ›

5. Keep a List of Repairs and Upgrades
  • Loose Floor Boards.
  • Leaky Roof.
  • Functioning Door Bell.
  • Rain Gutters.
  • Replace Bathroom Caulk.
  • Dripping Pipe or Faucet.
4 Jan 2018

How do I prepare my house for an appraisal? ›

By
  1. Be sure to have any safety equipment installed and working properly. ...
  2. Walk around your home before the appraisal with a critical eye. ...
  3. Inform your home appraiser of any home improvements you have done on your home. ...
  4. Do some sprucing up. ...
  5. Do some research on other homes in the neighborhood. ...
  6. Clean your heart out.

Do appraisers turn on faucets? ›

Appraisers flush toilets, turn on all faucets and ensure that both hot and cold water are working. The water heater must be in working order and strapped according to local code.

What a home appraiser should not say? ›

Just keep your communication to the appraiser about the facts of the home and neighborhood, how you priced the house, and any other relevant information you think the appraiser should know. And remember, don't discuss value. Don't pressure the appraiser to 'hit the value' and you'll be fine.

What makes an appraisal higher? ›

A property's appraisal value is influenced by recent sales of similar properties and by current market trends. The home's amenities, including the number of bedrooms and bathrooms, the floor plan's functionality, and the square footage are also key factors.

Does clutter affect an appraisal? ›

Unless the amount of clutter begins to affect the structural condition of a home, it will not affect an appraisal. The cleanliness of a home also has no impact on the value. It is not uncommon for an appraiser to walk into a cluttered, messy home.

What does an appraiser look at inside the home? ›

When appraisers appraise your home, they consider other homes that are similar in size in your area. They will take your home's square footage and the number of bedrooms into strong consideration when determining your home's value. The home appraiser will also assess the size of the lot the home sits on.

What are the 3 most important factors in real estate? ›

The three most important factors when buying a home are location, location, and location.

How much does age of house affect value? ›

When thinking about what type of home if right for you, it is important to note that older homes typically sell for significantly less than a newer home would. In fact, according to a recent article in the Wall Street Journal, new construction comes at a 10-20% premium over older homes.

What is the most important factor that makes a good home? ›

1. Location, location, location. Perhaps nothing is more important than the three L's, and there's a reason why it's said three times. Location is extremely important when it comes time to sell.

How do I impress an appraiser? ›

Here are eight ways you can bolster your appraisal:
  1. MAKE SURE APPRAISER KNOWS YOUR NEIGHBORHOOD. ...
  2. PROVIDE YOUR OWN COMPARABLES. ...
  3. KNOW WHAT ADDS THE MOST VALUE. ...
  4. DOCUMENT YOUR FIX-UPS. ...
  5. TALK UP YOUR TOWN. ...
  6. DISTINGUISH BETWEEN UPSTAIRS AND DOWNSTAIRS. ...
  7. CLEAN UP. ...
  8. GIVE THE APPRAISER SOME SPACE.
23 Jan 2013

Do appraisers look in closets? ›

Appraisers are looking in your closets not to evaluate storage space but because they can sometimes count the closet towards square footage.

Do appliances increase appraisal? ›

Kitchens with modern, attractive appliances and quality floors and counters will increase a home's appraised value, according to Bankrate. Defective appliances, broken cupboards and a lack of counter space will lower the value, so replacing or fixing them can also lead to a better appraisal.

Videos

1. What Does a House Appraiser Look For When Determining Property Value?
(News For Reasonable People)
2. How to Determine Property Value | Home Valuation Like a Pro
(BiggerPockets)
3. Interview with an Appraiser: Market Value Isn't Just What a Buyer Is Willing to Pay (Part 1)
(HomeLight)
4. Home Appraisal - What Matters Most; How Home Appraisers Put A Price Tag On Your Home
(Sachs Realty)
5. How Does A Home Appraisal Work?
(Win The House You Love)
6. How to Appraise a House Part 1 - with Bruce Glenn
(REI LIVE)

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