So today’s question: What do appraisers look for in a house. And this is important to know because the whole transaction very often depends on the appraisal, so it’s important to sellers and buyers.
How Appraisers Determine Value
Appraisers determine value by comparing your home to similar homes nearby and then they make adjustments, adding value to your home if you have more square footage or if your home has better upgrades. When you purchase a home with a mortgage loan, the lender will require that the home being appraised by a licensed appraiser to see if the home is worth what they’re lending you. The appraisal is different from a home inspection.
Difference Between Home Inspection and Appraisal
The home inspection is optional and just focuses on needed repairs for the house and it’s more thorough in that respect. An appraisal looks at the homes condition as well, but also looks at locations zoning, floor plan. So it’s much broader. But there are several key items an appraiser will look for in the home.
What Appraisers Look For In A Home
They will usually take time reviewing the exterior of the home to ensure it is structurally sound. They will look for any signs of water damage or other problems such as a chimney that is cracked or leaning away from the home which could indicate structural damage along with a lopsided porch or stairs -things like that and if they suspect that there is structural damage, they will make note of it. And while they won’t focus so much on whether or not the house is clean.
They will look for signs of neglect: visible electrical issues, broken windows, damaged floors, broken appliances, cracked walls, broken doors, those kind of things. And they also don’t pay as much attention to cosmetic details, but they will note if the home is particularly run down.
So it’s a good idea to address as many of these issues as you can. The location, the floor plan, the age of the home is of course out of your control. Although a well maintained older home is better than a newer neglected home. And as a rule, new construction is going to appraise higher than resale homes.
And appraisers are influenced just like the rest of us on the first impression of a home, the curb appeal and if the home looks like it’s well maintained. So, you’re not only getting your home ready to appeal to the buyers but also to the home inspector and the appraiser. And if you’ve done upgrades, be sure to make a list with the dates the work was done and give that to the appraiser.
Some Appraisers Are Less Thorough – Some more
So those are the things you can expect a home appraiser to address. It has been my experience that a lot of that depends on the appraiser. Some are more thorough than others just like any service provider and that’s one of the reasons waiting for the appraisal result is kind of nerve racking. The house will be fine according to one appraiser, but another one may cite a bunch of repairs and as a rule, conventional loans will take the condition of the home into consideration and adjust the value.
Whereas a government based loan fha, va, usda are more likely to cite problems and specify that they have to be repaired as a condition of the loan being approved. So what happens if the home appraises lower than the contract price? And that’s fairly common in the current market because prices are going up and appraisers put a lot of weight on past sales.
What if Appraisal Comes in Low?
And if that happens, if the appraisal comes in low, either the buyer will need to cover the difference or the seller will need to adjust the price. Quite a few contracts these days indicate upfront that the buyer will cover the difference if the appraisal comes in low, we’re just in that kind of market right now. It’s a seller’s market.
A low appraisal can be contested if the appraiser got something wrong or missed some upgrades. That can be pointed out and it works – sometimes. Definitely worth doing. If you suspect they got something wrong.
If you’d like a copy of a sample appraisal report, you can download, that at
And for some insights into the various types of loans and which one might be best for you, here’s a video I did not too long ago, and it goes into the requirements for each type of loan, including the standards of the appraisal required for each type of loan.
Contact me anytime with any questions. And I thank you so much.