“They’re ultimately trying to confirm that the contract price is fair for everybody—the buyer, the seller and the bank, because the bank’s lending the money.”
So, what do appraisers look for in a house to make this tricky determination? To help you get a glimpse of your house in the eyes of an appraiser, we chatted up John Huston, a professional appraiser in St. Petersburg, Fla., who serves three counties and has appraised more than 3,800 properties since 1999.
Let’s break down the dozens of internal and external factors that appear on the Uniform Residential Appraisal Report and walk through the difference between elements of the home that add value versus add marketability.
What home appraisers look for: External factors of the house
Appraisers must be qualified and certified in your state and, in most states, adhere to the Appraisal Foundation’s Uniform Standards of Professional Appraisal Practice. Depending on your property’s condition and size, the appraisal process can be a quick 15-minute visit or a two- to three-hour examination.
To start, the standard appraisal report includes external facts about the property: its census tract, neighborhood boundaries, and other legal definitions.
Other external factors include:
- Neighborhood characteristics (i.e., urban, suburban, rural)
- Percentage of present land use in the neighborhood (one-unit housing, two- to four-unit housing, multifamily, commercial)
- Zoning classification
- Lot size
- Whether the property has public utilities
- The type of driveway surface and any car storage. “Is there a one-car garage versus a two-car garage? Those have value, especially with the hot sun,” Huston said.
“A lot of the information is going to be based on numbers: measurements, room sizes… A lot of that stuff you can’t really change,” explains Santiago Valdez, a Chicago, Ill., agent at Compass for 15 years who specializes in properties with an average price point of $258,000.
He and other agents like to be present during the appraisal to point out any quirks or special features about the property. “In Chicago, for example, a single-family house is 19 feet wide. If you have a house that’s 28 feet wide or 20 feet wide, you want to make sure that you bring that up to the appraiser. That’s going to be very different, especially in a place like Chicago that has 25-foot lots,” Valdez said.
What home appraisers look for: Internal factors of the house
Here, the appraiser looks closely at the structure, condition, and size, including:
- The home’s square footage
- Number of bathrooms and bedrooms
- Remodeled versus updated kitchen/baths
- Foundation type
- Whether there’s a full or partial basement, crawl space, or attic
- Materials used for the walls, floors, and windows
Although he’s not a pest inspector, Huston said he will note if he sees evidence of termites, such as “termite dirt” on windowsills.
An FHA or VA loan also will require an appraiser to note certain safety details, such as whether there are handrails on all stairways and smoke detectors on all levels, Huston said.
Valdez said he likes to call attention to features or drawbacks that might not be obvious during the appraiser’s inspection. For instance, he’ll note if a property gets good natural light because of the number of windows or a higher ceiling. “Light in Chicago is incredibly important,” he said.
Likewise, he likes to note if a condominium that has sold at a lower price doesn’t get as much light or is close to a noisy air conditioning unit—something an appraiser wouldn’t notice during the winter.
What home appraisers look for: What’s the general condition of the house?
An appraiser will evaluate and comment on:
- The materials and conditions of the foundation and exterior walls, the roof surface, screens, gutters and downspouts
- The materials and conditions of the floors, walls, and trim
- Any physical deficiencies or adverse conditions that affect the property’s structural integrity or livability
- General maintenance and upkeep, such as whether there is peeling paint or leaky faucets, missing door handles, and so on.
What home appraisers look for: Home improvements, upgrades, and additions
An appraiser evaluates necessities such as the type of heating and cooling systems a home has. He or she also takes into account any upgrades and amenities such as:
- Energy-efficient items
- Fireplaces or wood stoves
- A patio or deck
- A porch
An in-ground swimming pool adds some value, but it’s depreciated value because of the maintenance involved, Huston said.
Put another way, spending $120,000 on an in-ground pool doesn’t guarantee a greater appraisal value compared to your neighbor’s $35,000 pool. “If you go to resell, you’re not going to get $120,000 for your pool,” Fonseca said. “Each of you has a functioning pool. It doesn’t really matter who spent more money.”
What carries greater weight are upgrades, especially on older homes, such as a new roof or air-conditioning system.
“A lot of times an appraiser will come and look at an air conditioner, and they’ll see the age on it, or will check the permits when they pull permits,” Fonesca says. “But it’s different when you tell them, this was just put in, and it’s a Trane air conditioner, and it was $7,000. And we just put a new roof in last year, and it was this much money.”
Having receipts and paperwork handy for other renovations also can help the appraiser adjust accordingly, Valdez added. “It’s very difficult to notice the difference between $15,000 cabinets and $60,000 cabinets if you don’t know what you’re looking for.”
What home appraisers do not look for: Movable features and decor
Although real estate agents appreciate a neutral decor to help buyers to imagine their belongings in a home, a home’s general aesthetic is not high on an appraiser’s list for assessing value.
“All-new ceiling fans, Bahamian shutters … none of that stuff adds value. It’s all considered personal property,” Huston said. A general rule of thumb is, if it’s nailed down and you can’t take it out, then it’s considered part of the house.
An upgraded microwave doesn’t add value, for instance, because it’s moveable. Neither does a utility shed or a hot tub.
That said, “people don’t move hot tubs,” Huston said. While such an item might not add market value on an appraisal report, a real estate agent would say it adds marketability.
If you have personal property you’re selling with the house, such as a boat for use with an attached dock, that’s something the appraiser should know.
How to get your home appraisal-ready
To help an appraiser see your home in the best light, the experts recommend the following:
- Gather relevant paperwork, such as the most recent real estate tax bill and any homeowners’ association or condominium covenants and fees
- Compile a “brag sheet” of major home improvements and upgrades, including the date of their installation, cost, and permit confirmation (if available)
- Make sure that all areas of the home are accessible, including any crawl spaces
- Fix minor gaffes, such as chipped paint on the baseboards and squeaky hinges
Most important, clean your home ahead of the appraiser’s visit (use our comprehensive deep cleaning checklist so you don’t miss a spot). Appraisers are trained to look past clutter and disarray, but let’s be honest—a clean home leaves anyone with positive feelings.
If the appraisal comes in low, you’ll have to negotiate with the buyer to bring more money to the table, lower your asking price, or order a second appraisal.
“If you’re going to sell a car, you’re going to wash the car, vacuum it, probably (put) Armor All (on) the tires, because you only have one chance to make a first impression,” Huston said. “Lots of times, people don’t do that.”