What’s the Appraiser Looking For?
If you’ve recently applied for a mortgage or refinanced your home, there’s a good chance that the bank has requested an appraisal of the property. But what exactly does the appraiser look at to determine your home’s value? Whether you're a buyer or a seller, understanding the appraisal process can help you better navigate your real estate journey.
Let’s break it down!
Property Location
The location of a property is one of the most important factors an appraiser considers. Homes located in desirable neighborhoods or areas with strong school districts, good amenities, and low crime rates tend to have higher values.
✔️ Proximity to parks, schools, shopping centers, and public transport can all impact the value of the property.
Appraisers compare the home’s location with nearby properties that have sold recently to determine how the area influences the value.
2. Size of the Home
Larger homes usually have a higher value than smaller homes, but there are other factors at play here, like the layout and use of space. The appraiser will evaluate:
✔️ Total square footage
✔️ Number of bedrooms and bathrooms
✔️ Overall floor plan and room sizes
If a home has a functional layout that maximizes space, this could increase its value.
3. Condition and Age of the Home
An appraiser will also consider the condition of the property. Homes in need of significant repairs or with outdated systems will likely be valued lower than homes that are in good shape.
✔️ The age of the home matters too. Older homes may have more charm, but they might require more maintenance, impacting their value.
Appraisers look for things like:
✔️ Foundation issues
✔️ Roof condition
✔️ HVAC systems
✔️ Plumbing and electrical updates
The more recent updates or renovations, the higher the potential value.
4. Comparables (Comps)
One of the most important aspects of an appraisal is the comparison to recently sold properties in the area, also known as comps. The appraiser will review homes that are similar in size, condition, and location, and that have sold in the past 3-6 months.
✔️ If a home has upgraded finishes or more amenities, it may fetch a higher price than similar properties without those updates.
The appraiser will use comps to ensure the home’s value aligns with the local market.
5. Upgrades and Renovations
Home improvements, such as kitchen or bathroom renovations, new flooring, or energy-efficient upgrades, can boost the value of a property.
✔️ Granite countertops, modern appliances, and updated lighting could increase the home’s appraised value.
✔️ However, poorly done or non-permitted renovations may lower the appraisal, especially if they impact the functionality or safety of the home.
When an appraiser walks through your property, they will take note of any renovations or improvements made and assess how they affect the home’s overall worth.
6. Curb Appeal and Exterior Features
The first impression a home makes can influence its value. An appraiser will assess:
✔️ Landscaping
✔️ Exterior paint
✔️ Driveway and garage condition
✔️ Fencing and other outdoor structures
Homes with well-maintained yards, tidy exteriors, and attractive curb appeal are often valued higher than homes with noticeable exterior issues.
7. Market Conditions
Appraisers also take into account current market trends. In a seller’s market, where demand is high, home prices can be inflated, while in a buyer’s market, prices may be lower.
Factors like interest rates, economic conditions, and local housing inventory will also affect the appraised value of the home.
8. Local and Zoning Regulations
Appraisers will consider the local zoning laws and regulations, especially when evaluating properties that may have the potential for rezoning, redevelopment, or additions.
✔️ If a home is located in an area where future development is planned, it could influence the home’s value in a positive or negative way.
9. Potential for Future Appreciation
In some cases, an appraiser will consider whether the property has potential for future appreciation. If the home is located in an area with growing development or improvements, it might be worth more in the future.
The appraiser might look for signs of local investment, such as new infrastructure, improvements in the neighborhood, or planned developments that could increase property values over time.
10. Your Home’s Unique Features
Some unique characteristics can also add value to a property:
✔️ View: A home with a spectacular view of the water, mountains, or a park could be appraised higher.
✔️ Basement: Finished basements or additional living space increase a home’s value.
✔️ Pool or Hot Tub: These may add value, but in some cases, they could also be seen as a maintenance liability, depending on the area.
An appraiser will take note of these unique features and adjust the value accordingly.
An appraisal is a crucial part of the home buying and selling process. It ensures that both the buyer and the bank are on the same page regarding the home’s value. While appraisers consider a variety of factors like location, size, condition, and comps, the final value will ultimately depend on the market and the home’s unique features.
If you’re planning to sell or buy a home, understanding what the appraiser is looking for can help you prepare better for the process.