An appraisal is a critical part of the homebuying process, as it determines the value of the property before a lender agrees to move through with a mortgage. But how is this value calculated? Check out this list of seven factors that impact the value of a home during an appraisal.
Condition of the home
First, the appraiser will note some of the general details of the home, ranging from the materials used throughout the house to the property’s overall condition. If anything is unsound or unsafe inside the home, the appraiser will make a note of it. From broken appliances to missing shingles, signs of deferred maintenance may negatively impact the home’s value. Appraisers will also look for signs of infestations. Upgrades to features like the electrical system, roof, or windows, could positively impact the home’s value.
Age of the home
The appraiser will consider the age of the home when calculating its value. However, you shouldn’t expect a newer home to receive a higher value than an older home due to its age. While new homes will likely have fewer issues when it comes to maintenance, well-maintained older homes located in historic districts tend to have a higher appraisal value.
The amount of living space inside a home will influence the property’s overall value, and a larger home will typically be worth more than a smaller home in the same market. Appraisers will account for the square footage, along with the number of bedrooms and bathrooms. Additionally, storage space will also be a factor, as large closets, along with a useable attic and basement, will help a house appraise at a higher value.
A home’s location could impact its value based on several factors, including crime rate, school district, road maintenance, and the distance between the house and schools, hospitals, fire stations, and police stations. If the home is next to an undesirable neighboring property, like a landfill, its value may be lower. Also, the home’s location within the community may affect the value. If the house is on a quiet street, it may be worth more than a home on a busy road in the same neighborhood.
If a home has received upgrades since its last appraisal, renovations like a new garage or kitchen makeover can impact its value. Even more practical upgrades, like a new roof and energy-efficient appliances, can increase the home’s value.
Comparable homes in the area
An appraiser will compare the home to others recently sold or those in the market in the area that are similarly sized, with comparable features and number of rooms. If you’re wondering what your home may be worth before an appraisal, look at homes similar to yours in the area to get a general idea.
The overall state of the real estate market in the area will also play a role. If the area’s demand for housing is high, the home may receive a higher appraisal value. However, if the demand is low, the value of the house may be lower.
Check out this blog to learn more about the ins and outs of the home appraisal process.