What Do Home Appraisers Look for When Valuing a House?

A home appraisal is an important part of many real estate transactions because it provides an independent estimate of a property's market value. For buyers using financing, lenders generally rely on the appraisal to confirm that the home is worth enough to support the loan.

But what exactly does an appraiser evaluate?

The answer goes well beyond simply looking at the size of the house. Appraisers consider the property's condition, location, features, recent comparable sales, and many other factors before arriving at a final value.

What Appraisers Look for Inside the Home

During the interior inspection, an appraiser evaluates the overall condition and design of the property.

They may look for signs of deferred maintenance, water damage, pest problems, safety concerns, or other issues that could affect the home's value. The condition and age of fixtures, appliances, and major systems can also be considered.

Updates and improvements matter as well. Features such as newer windows, central air conditioning, upgraded kitchens or bathrooms, fireplaces, and other improvements may be documented as part of the appraisal.

However, renovations do not automatically increase a home's value by the exact amount spent on them. Appraisers evaluate how those improvements compare with the surrounding market.

Do Appraisers Look in Closets and Other Areas?

Appraisers may need access to closets, attics, basements, crawl spaces, and other areas of the property as part of documenting the home's size and condition.

Homeowners do not need to make every space look perfect, but keeping areas accessible and reasonably organized can make the inspection process easier.

What Appraisers Look for Outside

The exterior condition of the home is another important part of the appraisal.

Appraisers may evaluate the roof for visible damage or missing shingles and inspect the foundation for cracking, deterioration, or signs of moisture problems.

Other exterior features can include the siding, garage, deck, porch, chimney, lot size, and the property's overall location.

Visible maintenance issues can affect the appraiser's assessment, particularly when they suggest that larger repairs may be needed.

What Appraisers Usually Don't Care About

Not everything inside your home influences its appraised value.

Personal decorating choices, curtains, removable furnishings, and everyday signs that someone lives in the property generally are not major factors.

An appraiser is evaluating the real estate itself rather than your personal style.

There is an important difference, however, between normal clutter and actual maintenance problems. A dripping faucet, broken cabinet hardware, damaged surfaces, or missing components may be considered because those issues relate to the property's condition.

Comparable Sales Play a Major Role

After inspecting the property, the appraiser typically researches comparable properties, commonly called "comps."

These are recently sold homes that are as similar as possible to the subject property.

Appraisers may compare factors such as location, square footage, lot size, age, bedroom and bathroom count, condition, parking, amenities, and overall property type.

A nearby sale is not automatically a good comparable. A property may be physically close but significantly different in style, condition, size, or neighborhood characteristics.

When comparable homes are not identical, the appraiser can make adjustments to account for differences.

For example, if a comparable property has an additional bedroom, larger lot, or upgraded features, the appraiser may adjust its value when comparing it with the property being appraised.

The final appraised value combines information from the physical inspection with relevant market data and comparable sales.

How Sellers Can Prepare for an Appraisal

Homeowners can take several simple steps before the appraiser arrives.

Make sure the appraiser can easily access every part of the property, including bedrooms, closets, the attic, basement, garage, and exterior areas.

It can also help to prepare information about significant improvements such as a newer roof, updated HVAC system, remodeled kitchen, additional bathroom, new siding, or other major upgrades.

Cleaning and decluttering can make the property easier to inspect, while taking care of minor maintenance issues such as loose hardware or leaking faucets can help ensure that small problems do not distract from the home's overall condition.

What Happens if the Appraisal Comes in Low?

A low appraisal can create complications when a buyer is financing the purchase.

For example, if a buyer agrees to purchase a home for $250,000 but the property appraises for $230,000, the lender generally will not simply finance the additional $20,000 difference.

Depending on the purchase contract and circumstances, the buyer and seller may renegotiate the price, the buyer may contribute additional cash, both parties could agree to split the difference, or the appraisal could potentially be challenged if there is evidence that relevant information was overlooked.

An appraisal contingency can also provide important protection for buyers by allowing them to cancel under certain circumstances if the property does not appraise at the necessary value.

The Bottom Line

A home appraisal considers much more than square footage.

Appraisers evaluate the property's condition, improvements, exterior features, location, lot, amenities, and recent comparable sales before forming an opinion of market value.

For sellers, keeping the home accessible, addressing obvious maintenance issues, and documenting major improvements can help the appraisal process go more smoothly.

For buyers, understanding how appraisals work can make it easier to prepare for one of the most important steps between an accepted offer and closing.