A home appraisal is an important part of the home buying and selling process. It gives the buyer, seller, and lender an estimate of the market value of the home. There are many factors that can negatively affect a home’s appraisal value. Being aware of these factors can help home owners prepare their home to maximize its appraised value.
Poor Curb Appeal
The first impression a home makes is its exterior curb appeal. A home with poor curb appeal can negatively impact the appraisal. Things that detract from good curb appeal include:
- Overgrown landscaping
- Peeling paint or siding
- Cracked driveway or walkway
- Cluttered yard
- Old roof or gutters
Improving things like landscaping, exterior paint or siding, and the driveway and walkways can go a long way in improving curb appeal. Keep the yard tidy by mowing, pruning trees/shrubs, and clearing out any clutter or junk.
Dated Interior
While the exterior is important, the interior condition plays a major role in the appraisal. An outdated, damaged interior can negatively affect the home’s value on paper. Some things appraisers make note of include:
- Old fixtures and finishes like flooring, countertops, cabinets
- Peeling paint and wallpaper
- Stained carpeting
- Missing or damaged baseboards and trim
- Cracked tiles
- Leaky faucets and plumbing issues
- Faulty appliances and fixtures
Making updates to modernize and repair the interior such as installing new floors, countertops, light fixtures, and fresh paint can help maximize appraisal value. Fix any leaks, cracks, or other damage. Make sure all appliances are clean and in working order.
Insufficient Living Space
Homes with insufficient living space or not enough bedrooms/bathrooms compared to similar sized homes nearby may get negatively impacted appraisals. Some things that signal inadequate space:
- Small square footage compared to neighboring homes
- Lack of closet space
- Cramped room sizes
- Not enough bedrooms/bathrooms
While it’s difficult to enlarge interior space without major construction, simple fixes include:
- Adding built-in shelving and storage
- Maximizing closet organization
- Opening up floor plan by removing non-load bearing walls
- Using space efficiently – convert unused spaces like attics to living areas
Fire and Safety Hazards
Any fire or safety hazards can jeopardize the home’s appraised value. Things appraisers will be on the lookout for include:
- Faulty wiring
- Broken smoke/CO detectors
- Lack of fire extinguishers
- Exposed wiring
- Leaky roofs/plumbing
- Broken railings and steps
- Cracked foundation
- Malfunctioning HVAC systems
- Broken windows
Ensuring the home meets all fire and safety codes will maximize appraisal appeal. Fix any faulty wiring, properly install smoke/CO detectors on each level, have charged fire extinguishers available, fix railings and steps, repair cracked foundations and leaky roofs, and make sure HVAC systems are up to date and functional.
Lack of Home Maintenance
Any visible signs of poor upkeep or lack of maintenance give the impression the home has not been well cared for and can negatively sway appraisal values. Things that signal poor maintenance:
- Chipping paint
- Rusting gutters
- Overgrown vegetation
- Mildew stains
- Water stains on walls/ceilings
- Torn window screens
- Dirty HVAC vents and filters
- Clogged drains
Giving the home a deep clean and making minor repairs goes a long way. Paint chipping walls, clean out gutters, prune overgrown plants, clean out HVAC systems, fix damaged screens, and address any mildew and water stains.
Upgrades Needed
Outdated systems that are near or past their usable limits will need upgrading sooner than later, which can negatively sway appraisal:
- Old roof
- Furnace/AC system over 10-15 years old
- 100+ amp electrical panel
- Galvanized plumbing
- Single pane windows
- No insulation
Replacing aging systems like the roof, HVAC, electrical, plumbing, and insulation can maximize appraisal. Energy efficient upgrades like new windows and added insulation also improve home value.
Unpermitted Renovations
Any renovations or additions done without proper permits can raise red flags and negatively impact appraised value. Unpermitted work may not meet code and can seem risky. Things like:
- Non-permitted room conversions
- Unpermitted kitchen/bath remodels
- Finished basements
- Deck and porch add-ons
Getting the proper permits and bringing unpermitted work up to code can improve the home’s value for appraisal.
Location Factors
Several location-based factors out of the home owner’s control can also negatively impact appraised value.
School Districts
Homes in underperforming school districts tend to appraise for less than comparable homes in better districts. Upgrading schools or changing district zoning lines can impact appraisals.
Crime
Areas with higher crime rates often get lower appraisals compared to safer neighborhoods. Improving security features may help offset some of the negative location influence on appraisal.
Proximity to Nuisances
Proximity to things like landfills, industrial areas, highways, railroads, or polluted sites can detract from appraisals. There’s little homeowners can do to change this proximity issue.
Natural Disasters
Homes in areas vulnerable to natural disasters like floods, wildfires, sinkholes or earthquakes tend to appraise lower. Upgrading defenses against natural disasters can sometimes help improve value.
Economic Factors
A decline in neighborhood home values due to foreclosures or industry/business closings can lower appraisals across the board. Not much homeowners can do to change economic influences.
Comparable Homes Selling For Less
Appraisers heavily factor in the selling prices of comparable homes recently sold in the area. If comparable homes are selling for less, that will negatively impact the appraised value. Comparable homes selling for more have the opposite effect.
Not much homeowners can do about this, as it’s dependent on the overall real estate economy in that area at that time.
What Homeowners Can Do
While some factors are out of the homeowners’ control, many can be addressed to maximize appraisal appeal:
- Improve exterior curb appeal – landscaping, paint, repairs etc.
- Update interior finishes and fixtures
- Add storage solutions to maximize space
- Address any safety issues
- Perform needed maintenance and repairs
- Upgrade aging systems
- Get permits for any renovations/additions
Making these improvements can help homeowners get the highest appraisal possible, which helps maximize sale proceeds.
Conclusion
Many factors outside the home’s condition can negatively sway appraisal, like location, neighborhood economy and sales data. But homeowners do have control over their home’s condition and curb appeal. Taking steps to have their home in top shape inside and out is key to maximizing appraisal value. This ensures they recoup the most money possible on the sale of their home.