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The Yankee Express

What hurts a home appraisal? 6 common factors to consider

Mark Marzeott

Not only does the house you’re selling have a fresh coat of paint you changed out the light fixtures in the bathroom and upgraded the stove. But is it enough to impress the home appraiser who’s come to assess your house’s value? There are quite a few factors that go into a home appraisal.
What does a home appraiser look for?
A home appraiser’s role is to determine a home’s value by investigating the property’s location, square footage, condition, number of rooms and any renovations or additions.  They’ll also look at recent sales of similar homes in the neighborhood. 
So, what are some of the key external factors they’ll consider? Like many parts of a home appraisal, much of this is beyond your control:
• The location. Everything from the quality of the school district to the proximity to employment opportunities gets factored in here. An appraiser will also consider things like entertainment (is there a movie theater or restaurants nearby?) as well as likelihood of any impact from a natural disaster (say, if it’s in a flood zone).
• Land use. If you look at the neighborhood, is it suburban, rural or urban? What percentage of the land is used for homes vs. businesses? Are there a lot of wide open spaces (parks, etc.) or is it very dense?
• The size of your lot. Do you have space to expand? A backyard? Room to grow? This can affect your appraisal amount.
• Access to public utilities. Everything from water to sewage—a home appraiser will want to know if hookups are available.
• Parking. This applies to the quality of the driveway (is it paved? dirt? something else?) to the size of your garage (or lack of one, if that’s the case).
• The year your property was built. The age of your property is something a home appraiser considers, but his or her assessment can be affected by maintenance.
• The roof and foundation type. Newer homes typically utilize newer materials. Same applies to your home’s siding, windows and doors (anything that’s more energy-efficient will give your home an automatic uptick in value).
• Square footage. Also, the number of bedrooms and bathrooms.
• Basement and attic features. Do you have a finished basement and attic? Can it be turned into a playroom? Or is it more of a crawl space?
• Recent renovations. They’ll particularly look at kitchens and bathrooms.
While the buyer’s bank typically chooses the home appraiser, it’s worth noting that the person they select is someone who has to be certified in your state, which means they have to adhere to the Appraisal Foundation’s Uniform Standards of Professional Appraisal Practice. Your REALTOR can guide you on this. A good way to think of a home appraiser is to consider them a neutral party. Their number one goal is to confirm that the price of the home is fair to everyone—the buyer, the seller and the bank. 
The appraisal happens after an offer is made, but before that deal has closed.  And if the home appraisal comes in and the price is off the mark?  If the appraised value is higher than the offer, then there’s typically no issue in terms of the loan, but if the appraisal is lower, this can be tricky since the lender will only loan money up to the appraised amount. The impact for the seller is that the buyer could pull their offer. This is where your REALTOR can help you with the additional negotiation to keep this deal on track.
Home appraisal factors you can control
There are quite a few factors that you have the power to change ahead of an assessment by a home appraiser.  Yes, things like your home’s location or recent sales in the neighborhood play a part, but you can control any renovations you’ve done or will do to your home. For instance, if you’ve built an addition like another bedroom or turned a dingy basement into a gorgeous rec room, this should raise your home’s value.
Make sure you hold onto any records of renovations you’ve done and keep in mind that what you paid for these renovations may not boost your home’s value dollar for dollar.
Other factors you can control:
1. A leaky roof.
One of the worst things you can do is delay on necessary maintenance. It’s that leaky roof or the deck repair you’ve neglected for years—over time they’ll become much more costly or extensive problems.
2. Dated finishes or appliances.
Things like worn-out countertops or bathroom tiles that need to be re-grouted all have an impact on the final assessment of your home before a sale. So take the time, and put in the money to fix these things before putting your home on the market.
Just be mindful that you don’t over-improve (go too fancy or too niche with your design choices on hardware or bathtubs, etc.) since you want a look that will appeal to the maximum number of buyers. (One man’s walk-in wine cellar is another man’s giant headache.)
3. Obvious repairs.
Let’s say you had someone in to assess that roof repair and you’re on it—your REALTOR will make it clear to your home appraiser that this will be done by the time of the sale, so that they don’t take that amount off the final value of the home.
Make sure to also honestly consider any renovations or changes you’ve made for the worse—particularly any amenities you’ve removed. For instance, if you’ve torn down a wall to prioritize an open floor plan, but eliminated a bedroom in the process or removed a jacuzzi from the backyard, this could detract from your home’s appraised value.  Think long and hard before you remove any features from your home.
Home appraisal factors you can’t control
OK, so how about the things you can’t control? Most of this comes down to your home’s location:
1. The value of nearby listings.
Like we said, it’s not just the internal factors of your home that make a difference—a lot is tied to how your home measures up against other listings in your area. (In the real estate world, this is referred to an assessment of comparable sales.)
In this sense, an appraiser will consider your house’s square footage and number of stories in comparison to similar models. This applies to amenities, too. Let’s say your home has a two-car garage. What are other homes with these types of features selling for nearby?
A good appraiser will consider multiple properties and be weary of outliers. (Say, that bargain listing right across the street from the highway off-ramp.)
2. Market conditions.
This is about supply and demand. If your home is in an area with decreasing prices or vacancies and foreclosures, this could negatively affect your home’s value. But if sales are on the rise and the future trajectory of your area looks positive (growing employment ops, for example), this all affects the price.
That said, if you’re fielding multiple offers on your property, your REALTOR will let your appraiser know. (That could be a testament to not just value and future value, but also improving market conditions.)
3. A busy street.
If your home is off a freeway or near a bustling shopping district with loads of outdoor restaurants, that can lower the final appraisal. 
Bottom Line: Consult your agent—and a home inspector—ahead of time
A REALTOR is trained to foresee potential problem areas. Have a conversation with them about any anxieties you have, but also do a walk-through to talk through the obvious changes you can make ahead of a home appraisal—all to ensure you get the top dollar you deserve.