A higher home appraisal is driven primarily by favorable comparable sales in your immediate neighborhood, larger living square footage, and high-quality, updated finishes. Appraisers also heavily weigh the property’s location, structural condition, and lot size when determining market value.
Maximizing a Home Appraisal
The appraiser bases the value on things such as square footage, condition, and upgrades. Appraisers are typically hired by lenders when deciding if a home is worth enough to secure a mortgage.
For an appraiser, the condition of the home's interior is just as important as its exterior. Appraisers will check the materials and condition of the windows and doors, flooring, plumbing and electrical systems, the number and quality of appliances, the kitchen, bathroom, and all other important parts of the home.
When dealing with a real estate appraiser, avoid saying anything that hints at pressuring them or attempting to manipulate the valuation. The goal of an appraisal is an objective, unbiased assessment, so never try to influence their final number.
Structural issues such as leaky roofs, cracked foundations, or water damage can significantly impact your home's appraisal value. Similarly, cosmetic damages such as chipped paint, stained carpets, or outdated kitchens and bathrooms can detract from your home's overall appeal.
The "3-day appraisal rule" refers to a federal requirement under the Equal Credit Opportunity Act (ECOA) that mandates lenders to provide borrowers with a copy of all property appraisals and written valuations at least three business days before a mortgage loan is finalized.
Major structural issues that are common FHA red flags include cracked or crumbling foundations, deteriorating roofs, and water damage. Other red flags that appraisers look for include: Missing handrails.
Take your home appraisal checklist and go through every room. Take notes on any repairs needed and clean every surface. Make a point to address typically forgotten areas like the corners where your walls meet your ceiling. A home that's not clean will appear to be worth less.
Factors that decrease property value the most fall into three main categories: location issues, structural damage, and poor neighborhood conditions. These factors can collectively slash a property’s value by 5% to 30% or more.
Since demand outweighs supply, housing prices are higher, and homes sell faster. Meanwhile, the worst months to sell a house are November through March or during the fall to winter, when potential buyers are preoccupied with holiday plans. Sellers should expect lower sales prices and higher DOM during these months.
Once the home appraisal is complete, your lender will review the completed report. The results will dictate how you and the seller move forward. Three situations can arise out of an appraisal. Here's what could happen.
Clean your house from top to bottom and remove extra clutter. Once you've scrubbed and straightened up everything possible, consider making some easy, low-cost cosmetic updates that can have a big impact, like the following: Paint or touch up existing paint. Hang updated window treatments.
Property rights in real estate are normally appraised at Market Value. There are many definitions of Market Value, but a good working definition is the most probable price the property would bring if freely offered on the open market with both a willing buyer and a willing seller.
An appraisal usually comes in low because the purchase price outpaced recent neighborhood sales, or the property has specific condition issues. Appraisers base their valuations strictly on objective, historical data rather than recent, emotion-driven bidding wars.
Prep your space — and its occupants for the home appraisals
Home appraisals won't typically devalue your home because it's messy—but a neat, organized home might help you. "Even if they're not consciously aware of it, the appraiser might value (a messy home) a little lower," Wiener says.
Make minor repairs.
Issues such as leaky faucets, flickering light bulbs and unsecure stair railings can all decrease the overall condition rating of your home and lower the valuation. Take some time to fix these minor details before the appraisal.
In conclusion, several factors can hurt a home's appraisal value, including poor maintenance, location, lack of curb appeal, outdated features, misrepresentation of property size, and over-improvement.
The "3-day appraisal rule" refers to a federal requirement under the Equal Credit Opportunity Act (ECOA) that mandates lenders to provide borrowers with a copy of all property appraisals and written valuations at least three business days before a mortgage loan is finalized.
Anything from deferred maintenance on the home to cool market conditions can lower a home appraisal. Recent sales in the neighborhood will help determine the market value of the home. So if sales have been slow, or if sellers have been accepting lower offers, the value of all homes in the area can be affected.
Key Takeaways: Property Red Flags at a Glance
Structural issues like foundation cracks or systemic damp are often “run away” signs. Legal “DIY” (unpermitted extensions or conversions) can lead to massive fines or insurance voids. Environmental hazards like Japanese Knotweed or flood risks shouldn't be ignored.
How Long After Appraisal to Close? Borrowers can typically expect a 15 to 30-day window between the completion of the appraisal and the closing. This includes time for underwriting, any follow-up documentation, final loan approval and scheduling the closing appointment.
Buyers waive an appraisal to make their offer more competitive in bidding wars, speed up the mortgage process, and save on upfront appraisal fees.
Fannie Mae is a corporation that funds conforming conventional mortgages and buys them from banks and lenders on the secondary mortgage market. According to Fannie Mae's guidelines, appraisals are usually valid for 12 months but require an appraisal update after 120 days.