How Does Home Appraisal Work?

Published on Tuesday April 18, 2017

According Realtor.com, spring through summer is the busiest time for buying and selling homes in most markets.

The days are longer, the weather is more cooperative and blooming landscapes really boost curb appeal. But before you list your home or make an offer to buy, you may want to consider having a home appraisal done.

Home Inspection vs. Home Appraisal

Similar to an inspection, an appraisal involves the evaluation of areas both inside and outside of the home. The difference between an inspection and an appraisal is that an inspector is looking for function while an appraiser is looking at value.

An inspection is done to identify defects in a home’s structure or systems. These issues may cause hazards to health or safety, like a faulty electrical system or a collapsing foundation. An inspector is not concerned with the price or value of a home—only the function of the structure and its systems.

An appraisal determines a home’s value. The appraiser may wind up spotting some of the same issues as an inspector, but the appraisal is primarily conducted to ensure that a home is really worth the money that a buyer is willing to mortgage.

An appraisal documents the quality and condition of a property in comparison to similar properties in a given area as a way to determine its market value. Ultimately, an appraiser’s primary role is to determine a home’s current market value.

Home Appraisals Can Benefit Buyers and Sellers

Home appraisals are usually performed at the request of a buyer’s mortgage company during a pending purchase, but they can also be done as part of a homeowner’s refinance.

“No credible financial institution,” Geoff Williams, a U.S. News contributor, writes, “will lend you money without an appraisal.”

Appraisals are used to protect a mortgage provider from over-lending on a property. For the same reason, appraisals may also prevent a buyer from overpaying for their home.

Sometimes, a seller wants an independent home appraisal before putting a house on the market. Appraisals can help savvy sellers find ways to make repairs or upgrades to boost their selling power. An appraisal may also help a seller avoid accepting a low-ball offer.

A Home Appraiser’s On-Site To-Do List

You may wonder, “What is the home appraiser going to look for?” In addition to looking at the overall condition of the home and surrounding property, they’ll look at the value of your home’s offerings compared with those of other similar-style houses in your area that have recently sold.

In all cases, upgrades and maintenance help your home during an appraisal. Dilapidation, damage, and dated areas may have a negative impact.

Here’s a sample breakdown of what an appraiser will examine:

1. Property Grounds

An appraiser walks the property and notes what the grounds have to offer. Lot size, curb appeal, and view all play a role in a home’s value. Amenities like in-ground pools, decks, pergolas, and porches are also considered.

2. Interior and Exterior Structures

The structure is the meat-and-potatoes of a home appraisal. The number of bedrooms, square footage, room count, and layout may all play a role in the value of your home.

Walls and Foundations: The appraiser makes note of a structure’s material and current condition. Brick or siding? Plaster or drywall? Are there any cracks or other signs of damage?

Kitchens and Baths: Are these areas outdated? Are there signs of water damage? Has the homeowner made significant upgrades? If these areas are done tastefully, they are likely to appeal to buyers AND to your appraiser.

Electrical, Plumbing, HVAC: Are these systems up-to-date? Have newer, energy efficient upgrades been made? Are there any visible signs of leaks or damage such as rust or mold?

Roof, Windows, and Doors: The appraiser is likely to pay special attention to these elements. Unlike other structural elements, these features can also affect your home’s value through curb appeal.

Let’s say you have old, drafty, single-pane windows. You may find that they reduce your home’s value because several don’t open and close properly or because the frames are rotting from condensation. You might also get zinged because the old aluminum frames just don’t give your home the curb appeal that your neighbor has since he had new window replacement work completed recently. Whew! That’s a lot to consider in a window.

Exterior entry and garage doors can have the same effect. In fact, in 2016 Remodeling.com reported that these upgrades could bring a seller a return of more than 80% on their investment.

Roofs are right up there as well. A roof replacement has the potential to receive more than 70 percent return on your investment. This is because a roof plays a significant role in the value of a home. Not only does it protect your home from the elements, but it can also improve energy efficiency and curb appeal.

3. Amenities and Upgrades

Maybe you’ve added a room or upgraded from vinyl to tile. Many homeowners replace carpeted homes with wood floors to increase the selling potential. Amenities like these may positively affect the value placed on your home during an appraisal and how you stack up to the competition.

Considering Comps

Neighborhood comparables, aka “comps,” are one of the more complicated aspects of an appraisal, but have a significant effect on your home’s value.

After an appraiser visits your property, she must research properties similar to yours that have recently sold in the area. Curbed, Washington, D.C., notes 9 important facets of appraisal comps. Property type, square footage, and finished living space are just a few features that appraisers use to compare your home to other neighborhood properties. You’ll be able to see how your home stacks up in your appraisal report.

Preparing for a Home Appraisal

Eric Stewart of Long and Foster’s The Eric Stewart Group offers some home appraisal prep advice to residents of Washington D.C., Maryland and Virginia. The biggies:

• Tidy up. Maintain your lawn and landscape, eliminate clutter, and keep pets out of the way.

• Tackle repairs. Stewart identifies minor repairs like broken light fixtures and peeling paint, but if these small-scale items matter, then it’s safe to say that major repairs should be taken care of well in advance.

• List improvements. A new roof is worth noting! Make a list of all major repairs or upgrades that have been made to the home including the cost, if possible. Give this list to the appraiser so that he/she can consider what’s been done to maintain the home.

Bringing value to your home

Now that you know how an appraisal works, you might be wondering if a significant issue like an aged roof will affect your home’s appraisal.

Long Roofing can help you protect your home from the elements while improving your home’s energy efficiency and curb appeal with a new whole roof system. Our team of experts can show you the energy-saving benefits of adequate roof ventilation, and can help you find the right shingles to complement the look and feel of your home for a lifetime.

Read a trio of glowing reviews from satisfied Long Roofing customers to see what we can do for you!

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