The cost of a house appraisal can vary widely depending on several factors such as location, property size, and complexity. On average, homeowners can expect to pay between $300 and $400 for a standard residential appraisal. However, for larger or unique properties, the cost can escalate to $500 or more. Keep in mind, this cost is typically covered by the buyer as part of their closing costs.
What Affects a Home Appraisal?
A home appraisal is a critical component of the real estate transaction process, whether you’re a buyer, seller, or looking to refinance. The home appraisal aims to determine the market value of a property through a comprehensive analysis of various factors. These factors include:
- The overall condition and quality of the property (both interior and exterior)
- The size of the property (including the number of bedrooms and bathrooms)
- The location and neighborhood characteristics
- Comparable sales in the area
- The current real estate market conditions
What Factors Negatively Affect Home Appraisal?
While numerous elements play into a property’s market value, several factors can negatively impact the outcome of a home appraisal. Some of these adverse factors include:
Less Desirable Location
The location of a property is a significant factor in determining its market value. Appraisers consider neighborhood characteristics, proximity to quality schools, accessibility to shopping and dining, and the overall safety of the area. If a home is located in an area with a high crime rate, low-rated schools, or any other undesirable features (e.g., noise pollution, nearby eyesores), the property trust is likely to be appraised at a lower value. Furthermore, properties in areas known for health risks or a high volume of poorly managed short-term rentals can also see an appraisal reduction.
Slow Real Estate Market
Market conditions heavily influence a property’s appraised value. In areas where property values are declining, where there’s an oversupply of homes, or where properties stay on the market for an extended period, appraisers may assign lower values. Moreover, a high volume of distressed properties in an area could also suppress price growth.
The layout of a home can significantly affect its appeal to potential buyers and, therefore, its market value. Homes with outdated, compartmentalized floor plans may be valued lower than those with modern, open-concept designs. However, if a home with an unusual layout has already found a buyer willing to pay a certain price, it may not significantly impact the appraised value.
Lack of Curb Appeal
While it’s not easy to quantify the value of curb appeal, it indeed plays a role in a property’s overall value. Appraisers look at the exterior condition of a property, the landscaping, and overall attractiveness. Poorly maintained exteriors, overgrown landscaping, or visible signs of neglect can negatively impact an appraisal. Simple actions such as mowing the lawn, tidying up the landscape, and refreshing paint can improve curb appeal and potentially boost your credit score and home’s appraised value.
Remember, an appraiser’s evaluation is based on an unbiased, objective view of the property and the current market. Understanding what negatively affects a home appraisal can help you take preventative measures and make improvements to boost your home’s value before the appraisal takes place.
The interior condition of a home significantly impacts its market value. Homes that require renovations or remodeling, particularly in the kitchen or bathrooms, are likely to be appraised at a lower value. Appraisers take note of outdated appliances or finishes that might not appeal to the majority of buyers. If a house has been kept up-to-date, even if it’s older, it is more likely to receive a positive a home appraisal.
Pest Infestation or Damage
Any signs of pest infestation or damage can negatively impact a home’s appraised value. Pest infestations such as termites or mice can cause substantial damage to a home, making it less desirable to potential buyers. If an appraiser finds evidence of pest issues, it’s crucial to address these problems before the appraisal process to avoid a drop in value.
Old or Broken HVAC
The functionality of a home’s heating, ventilation, and air conditioning (HVAC) system also plays a role in the appraisal process. An older or malfunctioning HVAC system can bring down a home’s appraised value, particularly if comparable homes in the area feature newer systems. The cost of replacing an HVAC system can be substantial, which can discourage potential buyers and lead to a lower appraisal value.
Structural or Foundation Issues
Structural or foundation issues are a significant red flag during the appraisal process. Major issues such as a cracked foundation can substantially decrease a home’s value. Being upfront with the appraiser about any known structural problems can help them make a more accurate appraisal, rather than guessing the potential repair cost.
Poor Quality Construction
The quality of a home’s construction directly impacts its appraisal value. Homes with basic finishes, inexpensive materials, or limited upgrades will typically receive a lower appraisal. Additionally, evidence of unskilled workmanship or poor-quality mechanical systems, like plumbing and electrical, will negatively affect the appraisal.
The age of a home can impact its appraised value, but it’s not always a negative factor. If a home has been well-maintained and updated to reflect current design trends, it may not see a value reduction despite its age. However, if an older home shows significant signs of wear and tear, it could be appraised at a lower value, especially if neighboring properties are in newer, better condition.
Fewer Beds and Baths
The number of bedrooms and bathrooms in a home affects its overall square footage, which in turn impacts the home’s appraisal value. If a home has fewer bedrooms or bathrooms than the norm for the area, this could lead to a lower appraisal. The potential need for future remodeling to meet the average can also negatively influence the appraisal.
Extreme Clutter or Signs of Neglect
Although appraisers are trained to look beyond clutter, extreme clutter or signs of neglect, like peeling paint or mold, can negatively impact a home’s value. It’s essential to ensure the home is tidy, and all areas are accessible for the appraiser to take accurate measurements and photographs.
Lack of Amenities
The absence of popular amenities can also lower a home’s appraised value. Features such as outdoor living spaces, a home office, or proximity to a great school district can significantly add to a home’s value. If a property lacks amenities that are standard in the neighborhood, it could lead to a lower appraisal.
Flood Zone Classification
Appraisers will consider a home’s flood risk as part of their assessment. Properties located in a floodplain that require flood insurance are generally worth less, unless they offer unique advantages like waterfront views. The introduction of a property into a flood zone can decrease its value significantly. It’s recommended to check your flood zone classification if you plan to sell, as predicted changes in floodplains could impact your investment property‘s value in the future.
A lack of parking can negatively affect a home’s value. In urban areas, where street parking may be limited or costly, having a designated parking space is highly desirable. If your property doesn’t offer this, it could lead to a lower appraisal. In suburban or rural areas, a home without a garage or driveway may also be viewed as less desirable, which could affect its market value.
Old Comps or Appraiser Lacks Local Knowledge
The quality of comparables (“comps”) used by an appraiser can significantly impact the appraised value. If an appraiser is not familiar with the local market, they may use outdated comps, or they might use comps from different neighborhoods that aren’t truly comparable. In both cases, this can lead to a lower appraisal.
What Can I Do To Prevent A Low Appraisal?
To prevent a low appraisal, make sure your home is in the best condition possible before the appraiser’s visit. Fix any minor repairs, update outdated fixtures or appliances, and clean and declutter your home. You can also provide the appraiser with a list of improvements and renovations made to your property, which could help to increase its appraised value. Lastly, make sure your appraiser has local knowledge of your area to ensure the most accurate and beneficial comps are used.
What Hurts a Home Appraisal: Factors You Can’t Control
While there are many aspects of your home that you can control and improve, there are also factors that you cannot control that may impact your home appraisal.
The local real estate market can significantly influence your home’s appraised value. If home prices in your area are declining, or if there are many foreclosures or short sales, this could negatively impact your home’s appraisal. Conversely, if home prices are on the rise, this could increase your home’s appraised value.
The location of your home is another factor that you cannot control. Properties located in desirable areas, such as good school districts or close to amenities like shopping and parks, tend to have higher appraised values. Conversely, homes located near busy streets, industrial areas, or in neighborhoods with high crime rates may have lower appraised values.
Size of the Home
The size of your home is a significant factor in its appraised value. Generally, larger homes command higher prices, but this can also be influenced by local market trends. If smaller homes are in higher demand in your area, they might appraise for more on a per-square-foot basis.
The age of a home is also something you cannot control. While well-maintained and updated older homes can still command a high market price, generally speaking, newer homes tend to have higher appraised values. This is because newer homes are less likely to have significant maintenance issues or outdated features. However, the impact of a home’s age on its appraised value can vary greatly depending on the particular real estate market and the condition of the home.
What Not to Say to an Appraiser?
When dealing with an appraiser, it’s crucial to keep in mind that they are there to do an objective assessment of your home. Here’s what you should avoid saying:
- Don’t exaggerate or make false claims about your home. It’s tempting to inflate the benefits of your home to get a higher appraisal, but appraisers are professionals who will fact-check and see through these tactics.
- Don’t provide incorrect information about your home’s features. If you provide incorrect information, it may cast doubt on the other information you’ve provided, leading to a potentially lower appraisal.
- Don’t openly discuss your desired home price. The appraiser’s job is to provide an impartial, unbiased opinion of value, so telling them how much you want the house to appraise for could be seen as trying to influence their professional opinion.
- Don’t criticize the appraiser’s expertise or comparisons. The appraiser is a professional, and it’s their job to choose comparable sales that they feel are most reflective of your home’s value. Instead, if you disagree, provide additional comps and explain why you believe they are more suitable.
How Can I Avoid an Appraisal?
There are a few scenarios where you might be able to avoid a home appraisal and how long does an appraisal take, but these are generally the exceptions rather than the rule:
- Streamlined Refinancing: Some government-backed mortgage programs, like the FHA Streamline Refinance or the VA’s Interest Rate Reduction Refinance Loan (IRRRL), often do not require an appraisal.
- Automated Valuation Models (AVMs): Some lenders use AVMs, computer models that use public records, including deed records and tax assessments, to estimate a property’s value.
- Home Equity Lines of Credit (HELOCs): Some lenders do not require an appraisal for HELOCs, relying instead on a quick valuation process or even just the homeowner’s estimate of value.
- Some Conventional Refinances: Depending on your lender, the amount you’re borrowing, and other risk factors, some lenders may waive the appraisal requirement for a conventional refinance.
Please note that while it’s sometimes possible to avoid an appraisal, doing so isn’t always in your best interest. An appraisal can provide a more accurate valuation of your home, potentially allowing you to borrow more or ensuring you don’t overpay when purchasing a property.
As an experienced professional in the mortgage loan and property market, Help individuals and families achieve their homeownership dreams. My mission is to simplify your real estate journey and secure the best possible outcomes in this ever-changing market.