Lenders, such as your bank, require an appraiser to evaluate a home before they will fund your mortgage. This professional evaluation ensures that the buyer’s desired home exists, that the area supports the loan amount and that the home has the features listed in the listing agreement. A home appraiser’s job is to confirm that the contract price is fair for all parties involved in a home sale – the buyer, the seller, and the bank, who is lending the money.
You could call this “curb appeal”, but that’s not the only thing the appraiser will be looking for in this instance. They’ll also check out the general landscaping of the home – of course they want to see grass and trees, as well as other lovely landscaping concepts, but if your new home has a lot of difficult-to-care-for plants and dead trees, this can negatively affect you home’s appraisal value. Look for a home with an easy to care for and clean landscape design to increase this appraisal value.
Different neighborhoods will increase or decrease the value of your home. The neighborhood’s value will be determined based on a number of factors – the crime rate, the distance from the home to schools, the distance from the home to the nearest hospital, the neighborhood’s school district’s rating, how close the home is to community amenities (parks, pools, gyms), how well maintained the public services are (roads, street lamps), and how busy or safe the immediate closest roads are.
Where your home is positioned within your neighborhood holds some weight. If your house is closer to the main road where you will hear traffic passing all night long, your house might not be appraised for as much as if your house was quietly tucked into the back of your neighborhood, where the ambient volume levels are much lower.
Age of the Home
A newer home won’t always be appraised at a higher number than an older home. New homes that were built in the last one or two decades usually have less major issues, but old homes that are located in historic districts or have been well maintained will also have a high appraisal value. However, if your home is 35 years old and looks like it’s 60, it will likely be appraised much lower than a 35 year old house that “looks it’s age”. It all comes down to how well the house has been maintained in all it’s years, and unfortunately, if you’re having a home appraised so you can buy it, how it’s past owners treated it is out of your control.
Design Style of the Home
There are certain design styles of a home that will likely never go out of style. For example, the choice to position the dining room near the kitchen is one that will likely continue in all new houses, forever. However, some home design trends just aren’t “in style” anymore, and believe it or not, even these cosmetic fixtures have an effect on your home appraiser’s valuation of your new house. If the cabinets are stained an out-of-date color, the permanent light fixtures are no longer in style, and the appliances are from the 90’s, you’ll likely get a lower valuation number than you thought!
Lot size can make a big difference when it comes to a home’s valuation. If there is a large yard, the home will be valued higher than a one without a yard at all, or one with a very small yard.
Evidence of Public Utilities (Heat, AC, Water, Gas, Electricity)
Not only is a house without access to public utilities not considered “usable and livable”, but it will be valued at much lower than a house with access to public utilities. The other thing that must be considered here is that not only does there have to be access to the utilities, they have to work well, too. Does water simply drip from the kitchen sink instead of running in a stream? Does the heat work, but not above 65 degrees? These things will also lower appraiser valuation.
Other things that the home appraiser will consider are how your heat is fueled, the age of the existing systems (regardless of how well they work), ease of use, and whether your AC is central or requires multiple individual room or window units.
Evidence of Driveway or Car Storage
There is nothing wrong with parking your vehicle on the side of the road in front of your house, but your house will simply be worth more if there is a driveway, and even more if there is an enclosed garage. The number of vehicles a garage can hold will also be taken into account, as well as the extra storage space in the garage. If the garage is detached, this will also affect the valuation of the home, and if it is separate from the home, it’s structural integrity and building materials will come into consideration as well.
Measurements (Room Size, Total Square Footage)
Total square footage is one of the first things a home appraiser will compare to the selling price of the home. They won’t let someone get away with trying to sell a tiny, cramped house for half of a million dollars. The selling price of the home and the space available in the home must make sense based on average home sales in the last year or two.
A home that has a tiny kitchen but huge bathrooms is going to be appraised lower than a home with room sizes that make sense. It’s not just about space in the home, but how it’s distributed. You want room sizes to be comfortable and good uses of the home’s total space without the ratio getting too wide. The appraiser will also look at how much of your square footage is actually livable and usable space. For example, if the basement is counted in the home’s square footage, but is not refinished, there is a lower percentage of the home that is considered “livable and usable”, which means the home’s appraisal value will be lower, too.
Number of Bathrooms and Bedrooms
What’s the first thing most people look for when viewing house listings? The number of bedrooms and bathrooms available! The more bedrooms and bathrooms, the higher the appraisal value will be. A one bedroom, one bathroom home will be valued at much lower cost than a home with five bedrooms and five bathrooms. In fact, one bedroom one bathroom homes sell for far cheaper than even a two bedroom, two bathroom home, because most families aren’t interested in them as they want a guest room, a home office, or a child’s room in that second bedroom.
Evidence of Any Past Remodeling
It’s very likely that the home you are having appraised has been appraised before, when it’s last owners bought it or built it, so your home appraiser almost certainly has files and paperwork on the house already. If they note that there has been remodeling, additions, or upgrades to the home, this will raise their valuation of the home.
Some of the most valuable home renovations are new garage doors, new and more secure front doors, a grand entrance room, new siding, and hardwood floors installed to replace carpet, but any type of remodel or upgrade will be accounted for.
Materials Used in Building
If the house was built in the last five or ten years, it will have better materials used in it’s skeleton than a home that was built 40 or 50 years ago. If the age of the house is older than the appraiser would like, they can typically be swayed by old materials being phased out with updates, such as a new roof, siding, windows, or wiring systems. If the home is structurally unsound, the appraiser will likely advise your bank not to fund your mortgage loan – this is for safety reasons.
The highest value structural updates that an appraiser will look for are updated electrical (especially when corrective), removal or non-existence of asbestos or other dated materials, a deeper basement creating potential living space (if not already refinished), new roofing, new siding, new windows, solar panels (where conditions permit), additional insulation, and high-quality entry and exit doors.
Condition of the Home (Interior and Exterior)
The general condition of the house will also be taken into account by the home appraiser. Does the house look dingy and old, or does it look well taken care of and pleasant? Is the outside of the house dirty and falling apart, or is it cleaned and kept up after? If carpet is peeling at the corners and the paint is chipping off the siding, the house will be valued lower.
Evidence of Amenities (Pool, Energy Efficient Appliances, Privacy Fencing)
Does the home have a lot of storage space? Is the basement refinished? Is the garage sized for two cars instead of one? These little things add up to a higher appraisal valuation. Much like when a home has recently been upgraded, the addition of amenities can boost a home’s valuation by a lot, but not quite as much as necessary upgrades such as those done for safety reasons.