What Hurts a Home Appraisal? 8 Factors You Can (and Can’t) Control

You’ve mopped and vacuumed the floors, dusted the bookshelves, and decluttered the countertops and closets — but you’re not expecting an old friend or a prospective in-law. Rather, the person you’re trying to impress is the home appraiser, who examines your home from top to bottom to arrive at a dollar amount of what your house is worth.

You might be anxious to get the results, considering the time and emotions you’ve invested in this home over the years. Plus, a homebuyer’s lender needs a home appraisal to validate the financing for the purchase, so there’s a lot on the line.

But while you might have talked to your agent, done your research, set out important documents like your last tax receipt to be helpful, and even crossed your fingers for good measure, it’s worth knowing what hurts a home appraisal so you don’t wind up on the lower end of the scale.

We’ve rounded up a list of common factors that can hurt a home appraisal as far as driving down your home’s value. Even if some are out of your control, they offer a peek inside a home appraiser’s calculations and provide you and your agent with tactics for negotiations.

Roofs that will hurt a home appraisal.
Source: (Jonathan Ybema / Unsplash)

Factors you can control

The amount of TLC you pour into your home and the investments you’ve made to keep it looking updated and fresh will go a long way toward a smooth appraisal. On the other hand, neglecting upkeep and letting a home age without any improvements will eventually catch up with you.

1. Deferred maintenance

By far, the biggest factor that reduces a home’s value is deferred maintenance, says Tom Heuser, a top-selling agent and single-family homes expert serving the Las Vegas, Nevada, area. Homeowners who neglect their regular upkeep often don’t realize how a nuisance can blossom into a costly and extensive problem.

Let’s say your roof has a small leak that might take $500 to fix. Postpone that repair for years, and rain will continue to seep into the roof, ceiling, and drywall, even if you live in an area that gets a handful of rainy days a year.

“Water is the most intrusive thing that can damage property,” Heuser says. “Now we have a mold issue. … So what could have been a $500 thing turns out to be a $25,000 thing years down the road.”

A home inspector can be a benefit here, giving your house a “checkup” for about $330 before you list your property. They can point out items you might not have noticed, such as cracked weather-stripping that can allow water to enter, or grading that allows water to flow toward your house.

2. Dated or undesirable finishes

Americans spend about $400 billion annually on remodeling their homes, statistics show, typically to upgrade worn-out materials, finishes, and surfaces. Dated finishes can dip a home’s value, says Mason Spurgeon, a certified general real estate appraiser since 2004 who handles appraisals in Missouri, Illinois, and Iowa.

Even buyers who appreciate the craftsmanship of an older home like to see touches that keep up with the times. “A 1970s home that’s been well-kept will sell amazingly well,” he says.

Nevertheless, experts caution against choosing finishes that cater to selective tastes. You won’t recoup your costs at resale if the finishes are too expensive or niche for your price point. “It’s called an over-improvement, like putting gold faucets in your house,” Spurgeon says. “The cost of something new does not always equate to value.”

Sellers sometimes have trouble differentiating between an appraised value and what a buyer is willing to pay. An appraiser will note a particular value for high-end kitchen appliances or quartz countertops, for instance. But if you have “undesirable finishes,” such as green quartz or white appliances instead of stainless steel, buyer interest drops — in Heuser’s experience.

“They’re still the same high-end appliances, but … they’re saying, ‘I don’t want white appliances; I don’t care how good they are. I have to replace these, and I have to replace that green quartz,'” Heuser adds.

3. Glossing over needed repairs

Ensure that your appraisal goes smoothly by being upfront about any necessary repairs that you haven’t completed, such as fixing a cracked foundation, Spurgeon says. That means giving the appraiser any bids or estimates for the work. An appraiser can factor that cost into their calculations instead of using a more general figure, which will throw off the value.

“Don’t try to withhold information because you’re afraid to tell us, and we have to guess,” Spurgeon says. “We can sort out what we need and don’t need. The more forthcoming and honest you are, the less likely we are to keep digging.”

Factors you can’t control

Your individual home is part of a larger real estate ecosystem. A low priced comp the block over, a geographically incomptent appraiser, or a market downturn can all impact the value of homes in your area, including yours.

4. Comparable properties

When you’re selling your home, your real estate agent will look at comparable sales in your area to help arrive at an asking price. The appraiser looks at these sales as well. While you can’t control the pricing of other homes, trust your agent to pull records of these comparable properties (or comps) to help justify their valuation.

“We really want to try to get homes that are as close to this house as possible. … If we’re selling a two-story home, we only want to compare that to other two-story homes,” Heuser said. That starts with square footage, ideally within 10% of your home’s size. “So if you’re selling a 3,000-square-foot home, hopefully, your comparable homes are between 2,700 and 3,300 square feet.”

He also aims to match the model of home from the same builder, or at least compare homes with the quality of construction, as well as amenities. “Do they have a community pool? Do they have a park? Are they gated, or guard gated? … We also would like to see them in the same school districts.”

If an appraiser compares your property to one that turns out to be an outlier as far as market value — such as a home sale among relatives for a lower cost, divorce sale or foreclosure — it can impact the appraisal. If there’s a better comparable for the appraiser to use, your agent can bring it up ahead of the appraisal, or find out the details behind the sale if the appraisal comes in low, and appeal.

 5. Market conditions

An appraiser doesn’t just consider your home’s value compared with historic data such as recent sales. They also analyze market conditions to forecast supply and demand. “[I]t is important to recognize that the value of a property is dependent on the future benefits that a property will bring to its owner,” notes The Appraisal Institute, a Chicago-based global professional association for real estate appraisers.

Put another way, an appraiser will examine whether sale or leasing prices are increasing or decreasing in your area, whether foreclosure rates and vacancies are dropping or on the rise, and similar factors. This analysis offers not just a property’s appropriate value but aims to show any future benefits of ownership, based on this empirical evidence, according to RD Clifford Associates, Inc., a real estate appraisal company since 1990 based in Montvale, New Jersey.

Even so, if your agent has fielded several offers above the asking price in your area, let the appraiser know. “We’ll put those three or four offers on the kitchen counter with the list of upgrades to show that appraiser that buyers were seeing the value, even though this property was listed much higher than most people would think,” Heuser says. “It’s just building our case that this home is worth this higher value that we’re asking for.”

6. Appraiser experience

This ties into the two factors above. Sometimes an appraiser works outside a regular coverage area, so they’re not as familiar with the market conditions and previous sales in that area — something Spurgeon calls “geographic competency.”

An example of where this might come into play is a location where the residents know about an Amazon.com distribution center being built. “The market’s jumping like crazy,” Spurgeon says, but if you happen to get an appraiser unfamiliar with this news, “he may pull sales that are too old.”

In a typical real estate transaction, the appraiser doesn’t work for the seller — their client is your buyer’s lender — so you can’t choose which appraiser visits your home. However, Spurgeon says the professionals he knows take the time to ask colleagues about an area that’s new to them. “If someone from St. Louis goes to St. Charles, he’ll be out of his element. It’s a matter of talking to other appraisers to get familiar with the area.”

Source: (Aditya Vyas / Unsplash)

Factors that might or might not matter: Location and layout

Certain elements about your property that would be impossible or difficult to change, such as its lot positioning, proximity to a big retailer, or overall layout, may impact its appraised value or homebuyers’ perception of it. But it depends on your market and the purpose of the appraisal.

7. Busy streets and bustle

If your home is on the corner of a busy street, an appraiser may calculate a lower value, depending on where you live.

While it’s hard to gauge how much road noise affects home value in general, experts say the impact can be significant depending on the noise and area property values. “If you’re in Beverly Hills, I can tell you it has a definite impact,” says Mike Ford, a member of the American Guild of Appraisers and a general certified real estate appraiser serving greater metropolitan Los Angeles since 1986.

He likened the noise level about a block from the freeway as “the Gran Prix at Monaco.” Sellers in that location could have a home valued 10%-20% less than others several blocks away, Ford says.

Aside from the appraisal, your agent also might adjust your pricing based on your location if they’ve heard what buyers in your area want. Let’s say your home abuts a shopping center with a large retailer like Walmart, resulting in frequent deliveries as well as a steady flow of shoppers.

“An appraiser’s not going to devalue that house based on its location, but a buyer will devalue that house because they don’t want [to hear] the semis in their backyard, or they don’t want the road noise or people walking on the sidewalk,” Heuser says.

8. Your home’s layout

Depending on when your home was built, the floor plan may be more compartmentalized than that of a comparable property. This can drop the value — but only if buyers see this “functional obsolescence” as an issue, Heuser says.

“If we’ve found a buyer that’s willing to buy a house at a certain price, we’ve kind of gotten through that functional obsolescence,” he says, adding that this comes into play more often when someone refinances a home.

Still worried about what hurts a home appraisal?

A pending home appraisal can seem like that box of chocolates in the film Forrest Gump: You never know what you’re gonna get. But it doesn’t have to be so nebulous or intimidating. Talk to your agent about any concerns you have regarding what might hurt your home appraisal so you can decide how to address them and move forward toward a successful sale.

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