Home Appraisal Checklist

May 6, 2021

Appraisals are an important step in the sale of any home. Their purpose is to determine the fair market value of a property, which in turn determines the price. Everyone wants to make sure they’re getting a good deal, and it always pays to be prepared.

Here’s what to expect from a home appraisal:

Home inspections vs. home appraisals

An inspection is performed by a home inspector to determine the condition of the house. This means checking things like plumbing, electrical, the roof and foundation. It’s usually done during the contingency period before a sale is finalized. If the inspection report finds any issues, the buyer can either back out or renegotiate.

A home appraisal is performed by a state-licensed professional to determine the value of the house. The condition is important, but only as it relates to the value. An appraiser will also take things such as lot size, square footage, and number of bedrooms into account.

The home appraisal process and timing

The first step involves a comparable market analysis. This means an appraiser will compare your home to similar properties sold in your area within the last six months. These are called comparables, or comps.

Then comes the on-site visit. This can last from 20 minutes to a couple hours, depending on the size of your property. Afterwards, it can take a few days to a few weeks for the appraiser to complete a written report.

If you’re ready to sell but don’t know how much your house is worth, an appraisal is a great place to start. It can guide your asking price, and it can even reveal opportunities to add value before listing.

For buyers, appraisals happen after the seller accepts your offer. Most mortgage lenders require an appraisal before issuing final approval of a loan to ensure an accurate price. The bank orders the appraisal, but buyers are the ones who usually foot the bill.

How to prepare for a home appraisal

Doing what you can to maximize your home’s value ahead of time can help you get the most out of your sale. This can mean simple things like touching up wall paint or bumping up your curb appeal. Or it can mean completing major home renovations such as updating a kitchen or bathroom.

How sellers and refinancers can prepare for an appraisal

  • Get all your documents in order, including copies of previous appraisals, tax documents and paperwork on home improvements
  • Make sure all rooms of the house are accessible, including crawl spaces
  • Check light switches, garage doors, air conditioners and heaters to make sure they work
  • Repair damaged walls, leaks or peeling paint
  • Secure handrails along stairs or raised decks
  • Consider giving your home a deep clean — carpet cleaning, re-caulking bathtubs, etc.

How buyers can prepare for an appraisal

  • Research home values and recent sales in the neighborhood
  • Include an appraisal contingency in your offer
  • Make note of the condition of the house you’re offering to buy, so you can plan ahead for repairs

What to do when the appraiser comes to your house

It’s important to let the appraiser do their work without distraction. Remember that sellers and refinancers can be present for appraisals of their property, but potential buyers cannot.

What a conventional loan appraiser looks for

An appraiser will look at the overall general condition of your home, including:

  • The foundation of the house, plus roof and gutters
  • Any glaring physical structural issues that would affect livability
  • Peeling paint, leaks or missing fixtures
  • Square footage and lot size
  • Number of bedrooms and bathrooms
  • Condition of appliances
  • Basement, crawl space or attic
  • Condition and materials of the walls, floors and windows
  • Zoning classification
  • Access to utilities
  • Quality of the landscaping

What a home appraiser does not look for:

  • General personal aesthetics or personal touches around the house
  • Ceiling fans, window coverings and shutters, and non-essential features

FHA and USDA home appraisal checklist

If you’re applying for a government loan, know that both FHA and USDA loans must meet appraisal guidelines and Department of Housing and Urban Development (HUD) property guidelines. These require specific appraisal inspection checklists that are slightly different from a conventional appraisal.

If your house has these problems, a buyer’s FHA or USDA loan may fall through:

  • Damaged siding
  • Driveway that needs repairs
  • Exposed floorboards
  • Any form of water damage
  • Leaky roof
  • Peeling paint

VA loan home inspection checklist

A VA loan is provided by private lenders and is designed to help service members, veterans and surviving spouses with the purchase of a home. VA guarantees a portion of the loan, which enables the lender to provide more favorable terms for the buyer.

These are some specific things looked at when buyers are securing a VA loan:

  • Secure foundation
  • Roof that doesn’t need repairs
  • Air conditioning and heating that work
  • Functioning sewer system
  • Water heater

Calculating the fair market value of your home

While there isn’t an exact calculation for how to determine the fair market value of your home, there are certain factors to consider:

  • Your local real estate market
  • The condition of your property beyond cosmetic issues. (i.e., utilities, sewer, lot size, etc.)
  • Comps for your area

What does “subject to” mean?

During loan appraisals, “subject to” refers to problems that must be inspected and/or corrected before the loan can be approved. A “subject to” appraisal ultimately outlines what the home will be worth after improvements are complete.

What is the $500 rule?

Appraisers typically value property in $500 increments. You can use this as a measuring stick to decide what improvements to make. Even small changes can contribute to the overall valuation.

Appraised value vs. tax assessed value

The appraised value and the tax assessed value serve different purposes. The tax assessed value is used only by your local property tax authority to determine how much you will owe in taxes. If there’s a discrepancy between the appraised value and the assessed price, you can challenge the assessed value to get it (and your tax bill) lowered.

Can you dispute an appraisal?

Yes. First, request a copy so you can review it thoroughly with your real estate agent. If you think there was a mistake or disagree with the value, you can request a value appeal or obtain a second appraisal.

The National Association of Realtors also notes that there has been a rise in allegations of discriminatory appraisals over the last few years. This has led to the PAVE (Property Appraisal and Evaluation Action Plan), which is focused on combatting racial and ethnic bias during the homebuying or refinance process. If you feel like you’ve been subject to a discriminatory appraisal, you can absolutely dispute it.

Preparation can be worth thousands

A higher valuation is directly linked to a higher sale price, and that means more money in your pocket. While you can’t control your local real estate market, you can definitely prepare your home to get the highest valuation possible.

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