When you’re buying or selling a home, a crucial yet often overlooked step is the home appraisal. This process ensures that everyone—buyers, sellers, and lenders—are on the same page regarding the property’s value. Understanding what appraisers look for can help you avoid unexpected delays and ensure a smoother path to closing the home loan. Below is a refreshed look at the appraisal process and a detailed checklist to help you get prepared.
What Exactly Is a Home Appraisal?
A home appraisal is an independent evaluation of a property’s market value conducted by a licensed appraiser. The appraiser examines the property’s condition, location, and comparable home sales in the area. Most lenders require an appraisal to confirm that they aren’t lending more than the home’s actual worth, giving buyers peace of mind that they are paying a fair price.
The Home Appraisal Checklist: What Appraisers Focus On
Appraisers assess various factors when evaluating a home. If you’re preparing to buy or sell, here’s what you should pay attention to:
- Home Size and Layout
- Square footage and number of bedrooms/bathrooms
- Room functionality—does the layout make sense?
- Bonus spaces like finished basements or attics
- Exterior Condition
- Roof: Any missing shingles, leaks, or signs of wear?
- Foundation: Are cracks or settling problems visible?
- Siding, Windows, Doors: Signs of damage, outdated fixtures, or peeling paint.
- Landscaping: Well-kept or neglected?
- Interior Condition
- Walls, Ceilings, Floors: Are there cracks, stains, or wear and tear?
- Kitchen and Bathrooms: Upgraded fixtures, appliances, or luxury finishes.
- Plumbing and Electrical: Safe, up-to-code, and functional systems.
- Lot Size and Usability
- Is the lot large and functional?
- Are there safety concerns or unusable areas?
- Upgrades and Amenities
- Recent home improvements such as energy-efficient windows, new roofs, or remodeled kitchens.
- Unique amenities like a pool, outdoor kitchen, or a custom wine cellar.
- Safety and Compliance
- Any safety hazards or code violations, such as missing handrails or faulty wiring.
- Location and Neighborhood
- Proximity to schools, parks, shopping, and other amenities.
- Crime rates and overall neighborhood desirability.
- Comparable Sales (Comps)
- Recent sales of similar homes in the area.
- Size, condition, and location factors compared to nearby properties.
Appraisal Considerations for Home Sellers and Agents
Once you understand what appraisers look for, you can take simple steps to help boost your home’s appraised value. Here are some practical tips:
- Make Minor Repairs: Fix leaky faucets, paint over scuffs, and replace outdated light fixtures. These small details may make a significant difference in perception and value.
- Clean and Declutter: A tidy, organized space allows the appraiser to focus on the home’s quality and features instead of being distracted by clutter.
- Highlight Major Upgrades: Create a list of recent improvements or renovations, including costs and dates, and provide it to the appraiser.
- Allow Full Access: Ensure the appraiser can easily access all parts of the home, including the attic, basement, and any exterior structures like sheds or garages.
Frequently Asked Questions About Home Appraisals
- What’s the difference between a home appraisal and a home inspection?
- An appraisal determines the market value of a home, ensuring the buyer and lender are aligned on price. An inspection, however, evaluates the condition of the home and reveals any necessary repairs. While the appraisal focuses on value, the inspection is about livability of the home.
- What happens if the appraisal comes in lower than the sale price?
- If the appraised value is less than the agreed sale price, the buyer and seller may need to renegotiate. The seller could lower the price, or the buyer may need to make up the difference out of pocket.
- Is an appraisal necessary when refinancing?
- Yes. Refinancing often requires a new appraisal to determine the current market value, especially if you’re tapping into home equity. The appraisal can affect key elements like your Loan-to-Value ratio and whether you’ll need private mortgage insurance.
Wrapping Up: What’s Next in the Appraisal Process?
Once the appraisal is complete, the report is sent to your lender for review. If the appraised value aligns with the loan amount, you’re well on your way to closing. Understanding the home appraisal process can help minimize surprises and keep the mortgage process on track.
Whether buying, selling, or listing a property, knowing what appraisers look for can give you an edge in making the home appraisal process seamless. For further insights or guidance through the mortgage process, reach out to our team at Supreme Lending today!