• Melanie Evans

What Do Home Appraisers Look for In a House to Determine Its Value?



You've found the perfect Waterloo Region home and reached an agreement with the seller on a price. Congratulations. Isn't it now all systems go for closing? Not so fast. One of the most crucial phases in the home-buying process is the home appraisal. Continue reading to find out what home appraisers look for when assessing a home's worth.


What are the purposes of house appraisals?


The appraisal's goal is to establish a fair and unbiased market value for the property. It's an important element of your loan package, and lenders won't give you money if you don't have one. Because the house is used as security for your loan, you'll need an appraisal unless you're buying it outright in cash.


The home appraisal assures both the lender and you that the agreed-upon sale price is reasonable. If the assessed value is greater than the agreed-upon sale price, that's OK since it just indicates the house is worth more than you're paying for it, giving you instant equity. It's a different issue if the appraised worth is less than the sale price, which we'll discuss later.


What home appraisers look for inside a house


Home appraisers do a comprehensive examination of all aspects of the property they are valuing. While the home assessment process has many components, the outside of the property and what appraisers look for in the interior are two of the most important.


When inspecting the interior of your potential new house, the appraiser will look at the general design and condition of the property, checking for any health or safety code violations as well as evidence of pests such as termites or rats. They'll also keep track of any neglected maintenance or water damage they discover. Depending on what they discover, appraisers may include repair needs in the evaluation. If there are any appraisal criteria, these must be met before the house may be closed.


The appraiser will also examine the inside of the house to determine whether it has a 'dated appearance', as this will affect the home's value. Outdated light fixtures, faucets, and kitchen appliances may all contribute to a 'dated appearance'.


They'll check to see whether the house has fireplaces and if any renovations or upgrades have been done to the residence's general condition. Insulated windows, central air conditioning, and a security system will all be mentioned if they are present.


Do appraisers rummage into people's closets?


When determining the overall square footage of a home, appraisers check in closets. This does not imply that every inch of your property must be in perfect condition for the assessment, but the inside of the home should be clean and clutter-free, including closets, beneath sinks, and in the attic. The appraiser's work will be made considerably easier as a result of this.


What home appraisers look for outside


The roof and foundation will be given special attention on the house's façade. The appraiser will check for any missing shingles or other apparent problems when appraising the roof. Water damage to the roof can allow water to flow into the inside, causing problems such as insect infestations and small animal infestations.


An appraiser will check for vertical or horizontal fractures, crumbling of the foundation, or any evidence of water leaking when appraising the foundation. The appraiser will inspect the chimney from the exterior to check whether it is broken or has changed from its original position.


The porch, deck, siding, garage, as well as the size of the lot and location of your home will all be considered by the appraiser when evaluating property worth.


What else do appraisers look at when determining the value of a home?


Appraisers often check for "luxury" features when determining a home's worth. An outdoor or indoor pool, a gourmet kitchen with warming drawers, theater rooms, outdoor kitchens, and spa baths are just a few examples.


What home appraisers don't look for when valuing a property


Because they are not considered real property, appraisers do not evaluate your choice of home décor or objects like as window curtains and blinds that may be taken down and removed from the home.


They will also ignore your home's "lived-in" appearance. They've been taught to ignore indications indicating a person or family lives in the residence. None of this will be included in determining the house's worth when it is assessed.


A "lived-in look" does not, however, imply kitchen cabinets without doorknobs or bathroom faucets that drip water constantly. These are instances of deferred maintenance, and the appraiser will take them into account when determining the property's worth.


What factors do appraisers use when determining the value of a home?


After the appraiser has completed a physical assessment of the property, they will gather data on "comps," or comparable house sales that are as near as feasible to the subject property.


Comps must not only be comparable in style to the home being assessed, but they must also have sold recently, usually within the last six months, and be close to the subject property. The appraiser can estimate the fair market value of your house by using comparable properties that are similar to yours and have recently sold in your region.


The appraiser next takes what they've learned about the subject property from their physical inspection and adds it to what they've learned about the comps to arrive at the property's fair market value, or assessed value.


Checklist for preparing your house for an appraisal


There are several things you can do to prepare your house for an appraiser's visit. A checklist comes in useful when you're on the selling end of the appraisal to ensure you don't overlook anything.


  • Make a list of any house improvements you've done and provide it over to the appraiser. Maybe you finished the basement or installed a bathroom. Make a list of those. Have you rebuilt the roof or added new siding? Those should be added to the list as well. There are many home renovations that can increase the value of a property, and you'll want the appraiser to be aware of them all.

  • Make a list of comparable sales for your house to provide to the appraiser with the help of your real estate agent. Your real estate agent sees a lot of houses, and they've undoubtedly seen some comparable ones in your neighborhood. This can aid the appraiser when it comes time to prepare the report.

  • Make certain that all sections of the house are accessible. This covers all rooms and closets, as well as the crawl space, basement, and attic.

  • Deep cleaning is essential. To put your best foot forward ahead of an appraiser's visit, clear away any clutter and tidy the hard-to-reach areas to present your house in the best light possible. If you're cleaning a room, start by decluttering it. Remember that keeping your house in good repair can go a long way toward giving the appraiser a favorable impression.

  • Organize the outside, front, and rear of your home. Trimming shrubs and bushes, clearing up leaf litter, and adding color to the front porch with plants are all great ways to improve curb appeal. Other low-cost curb appeal options include a fresh coat of paint on the front door and the addition of outside lights to the patio.

  • Make whatever small repairs that you are able to. Do you recall that dangling kitchen cabinet doorknob? Or how about the bathroom's dripping faucet? Fix those things with your trusty screwdriver and wrench. A little leg-work and elbow grease on your side might make a difference in the property's evaluated worth.


What happens if your home is appraised at a low value?


Your lender has called to inform you that the appraisal has arrived. The house appraised for $1,000 more than the agreed-upon sale price. That's fantastic news, and the seller is probably OK with it. But what if the appraisal turns out to be less than the agreed-upon sale price? There are numerous possibilities in this situation.


When writing out the initial offer, one method to protect yourself is to include appraisal contingency language in the sales contract. If the house appraisal comes in low, the buyer has the option to walk away from the agreement and receive their earnest money back.


There are still ways to make the purchase work if the sales contract does not include an appraisal contingency clause. You can pay the difference in cash as one option. Another option is to request a reduction in the sale price from the seller. You may even propose splitting the difference between the two of you in any way that is mutually agreeable.


Another option is to contest the assessment and try to persuade the appraiser to change their mind about the home's market value. You can also ask to be released from the contract, but if there is no appraisal contingency provision in place, you may lose your earnest money.

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