“Appraisers have a very hard job,” says Paul Fonseca, a top-selling real estate agent in Fort Myers, Florida. They are tasked with assessing a home’s value in today’s constantly evolving housing market. According to the Appraisal Institute, residential home appraisers employ a systematic valuation process to determine an opinion of a home’s market value. Most appraisers report their findings on a standard Fannie Mae and Freddie Mac form called the Uniform Residential Appraisal Report (URAR). We’ll fill you in on what home appraisers look for when evaluating your home with insight from six industry experts. Here’s an overview of what’s ahead: The standard appraisal report evaluates general property characteristics, including building materials and the condition of structural features. Under the sales comparison approach, an appraiser compares the home’s features to those of similar properties that have recently sold. For example, when comparing two similar homes, an appraiser may assign additional value to a home with a two-car garage when comparing it with a similar home that has a one-car garage. These are the characteristics that appraisers look for during the appraisal appointment: “It makes sense that a newer or a more updated home would sell higher than a similar but more outdated home,” notes Mason Spurgeon, a certified general appraiser and Owner of Spurgeon Appraisals. A recent remodel could give you a value bump, says Spurgeon. “Updated kitchens and bathrooms tend to have a pretty significant impact on the value, as these are the areas in which a buyer would spend most of their money if updates were needed.” Major components (big-ticket items such as a new roof or air-conditioning system) also carry weight, especially for older homes. “A lot of times an appraiser will come and look at an air conditioner, and they’ll see the age on it, or will check the permits when they pull permits,” Fonesca says. “But it’s different when you tell them, this was just put in, and it’s a Trane air conditioner, and it was $7,000. And we just put a new roof in last year, and it was this much money.” An in-ground swimming pool adds some value, but it’s depreciated value because of the maintenance involved, says John Huston, a professional appraiser in St. Petersburg, Fla., who serves three counties and has appraised more than 3,800 properties since 1999. Put another way, spending $120,000 on an in-ground pool doesn’t guarantee a greater appraisal value compared to your neighbor’s $35,000 pool. “If you go to resell, you’re not going to get $120,000 for your pool,” Fonseca said. “Each of you has a functioning pool. It doesn’t really matter who spent more money.” Spurgeon points to additional features that don’t necessarily add a lot of extra value. “Areas like porches, decks, etc., tend to have less of an impact in our market,” he says. “Location, location, location,” says Spurgeon, revealing the most influential characteristic for a home’s appraised value. While Fannie Mae guidelines don’t require appraisers to rate or judge a neighborhood, appraisers analyze objective data about the home’s location and any factors that could affect value and marketability. Appraisers look at the size, shape and topography of the lot, including easements and encroachments. The appraiser will also note amenities such as street utilities and vehicular access. Part of the evaluation process includes an opinion of whether the home’s characteristics are compatible with the market. According to Bethany White, a top Virginia Beach agent with over 13 years experience, FHA appraisal requirements tend to be stricter than conventional loan appraisals. Like an appraiser for a conventional loan, FHA appraisers provide their opinion of a home’s value. But unlike an appraisal for a conventional loan, FHA appraisers also evaluate the property for health and safety compliance. While a conventional loan appraiser may note the overall condition of a home, FHA’s guidelines take it a step further. The following are some of the FHA appraisal requirements that need to be met before closing: If the home doesn’t meet all of FHA’s appraisal guidelines, the homeowner would need to ensure that all items called into question are repaired before settlement. “The appraiser has to go back out and sign off on it,” says White. Whether refinance or purchase, the general valuation process remains the same from an appraiser’s point of view. With either type, the appraiser reviews the same property features to determine a home’s value. In fact, an appraiser working on a full refinance appraisal uses the same URAR form used for purchase loans. If you’re refinancing, your lender will order the necessary appraisal for your loan program. In some cases, the lender may not request a full appraisal. A bank’s underwriting guidelines may only require a limited appraisal where the appraiser doesn’t visit your home, such as a drive-by or hybrid appraisal. “[The appraisal type] really depends on whoever is doing the refinance,” explains White. “Your bank might do it a different way.” Outside factors could also affect whether your lender requests a limited appraisal or not — at least temporarily. Jolene Jacobs, a top agent who works with 80% more single family homes than the average Royal Oak agent, says that drive-by appraisals became popular during the pandemic, even for purchases. And an appraisal shortage in the Michigan area a few years prior resulted in more drive-by appraisals to keep up with demand at the time. Although real estate agents appreciate a neutral decor to help buyers to imagine their belongings in a home, a home’s general aesthetic is not high on an appraiser’s list for assessing value. “Appraisers take the entire property into account when valuing a property,” explains Spurgeon. “This wouldn’t include personal property like furniture and home décor.” According to Huston, “all-new ceiling fans, Bahamian shutters … none of that stuff adds value. A general rule of thumb is, if it’s nailed down and you can’t take it out, then it’s considered part of the house. An upgraded microwave doesn’t add value, for instance, because it’s moveable. Neither does a utility shed or a hot tub. That said, “people don’t move hot tubs,” Huston notes. While such an item might not add market value on an appraisal report, a real estate agent would say it adds marketability. If you have personal property you’re selling with the house, such as a boat for use with an attached dock, that’s something the appraiser should know. If you’re disappointed in the appraiser’s value, you have the option to contest the findings. According to Jacobs, “it’s rare that … an appraisal ever goes up after it’s come in low.” Still, you can offer additional data to challenge the report. According to the NAR, appraisers can only discuss the details of a report with the client. Since the appraiser’s client is typically the mortgage lender, you would need to contact the lender with a reason for why the appraiser should reexamine the value. When would an appraiser be most likely to reconsider the value of a home? Jacobs reveals that you’re most likely to see an adjustment if there’s an egregious error in material data. “We’ve found where appraisers have missed some very specific [factors], called a three- bedroom house a two-bedroom house,” says Jacobs. “And a third bedroom adds a lot of value.” Now that you know what an appraiser looks for, you can prep your home to ensure a successful appraisal. First, tidy up, says Jacobs. Appraisers are trained to look past clutter and disarray, but you’ll still want to put your best foot forward. Jacobs tells clients to prepare their home like they would for a prospective buyer. “Make it show just like when we had it listed,” she advises. (Not sure where to start? Use our comprehensive deep cleaning checklist so you don’t miss a spot.) Here are additional steps you can take to prepare for your appraisal appointment: “If you’re going to sell a car, you’re going to wash the car, vacuum it, probably (put) Armor All (on) the tires, because you only have one chance to make a first impression,” Huston says. “Lots of times, people don’t do that.”Improvements: Appraisers look at your home’s structure
General property characteristics
Interior characteristics
Exterior characteristics
Foundation and attic
Home appraisers also consider home improvements, upgrades, and additions
Improved kitchens, bathrooms, and major components carry the heaviest weight
Features such as in-ground swimming pools and porches may not add much value
Neighborhood: Location holds heavy sway over your home’s value
Site: Appraisers consider both on-site and nearby property characteristics
FHA appraisers look for these additional features
Appraisals for refinances work the same as those for home sales
Appraisers don’t consider moveable features or decor
You can challenge a low appraisal, but values typically won’t change
Tips for a successful home appraisal