If the buyer is obtaining a mortgage to purchase a house, though, a home appraiser must determine the value of the house for approval of funding. For example, if the buyer wants to purchase a house for $300,000 but an appraisal shows a value of only $250,000, the bank will lend only what the appraisal has revealed and nothing more. It’s also the same process in refinancing a house.
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What Does a Home Appraiser Check in a House?
Now, let’s break this down into major categories on what exactly an appraiser would check when appraising a house: physical condition, improvements, neighborhood, and site.
Physical Condition
Standard appraisal reports evaluate a general property characteristic with structural elements and their present conditions. Under the sales comparison approach, the appraiser’s subjective evaluation features of the house against other similar properties that have sold recently.
For example, a home appraiser might give a higher value to a two-car garage house while comparing it with a one-car garage house. A home appraiser will also look into four types of physical variables in exchange for the subdivisions being bought.
General Property Characteristics
Specific defining characteristics of your house, such as how many bedrooms and bathrooms it has, if it has a garage, and if you’re selling it in horrible shape.
- Side details: Area in sq ft of live area above ground, no. of rooms, bedrooms, and bathrooms
- Garage & driveway: Number of cars the garage can house, detached or built-in, and driveway surface type
- Accessory dwelling unit (ADU): Is an ADU allowed according to zoning? How does the ADU affect marketability or value for that property?
- Overall qualitative assessment: Affirming property condition as compared with the neighborhood.
Interior Characteristics
Everything going into a home, in-house furnishings and aesthetics, also up to the condition of those systems keeping your house running-managing heat (and cooling), water heater maintenance, etc., are covered.
- Heating and cooling: Type and condition of the system
- Floors: Material and condition
- Walls: Material and condition
- Trim: Material and condition
- Appliances: Presence and types such as Refrigerator, Range, Oven, and Dishwasher
- Energy-Efficient Features: Certifications for energy efficiency, tankless water heaters, and insulated ducts, among others.
Exterior Features
Anything outside of the house generally exists. Not just in terms of appearance but also in terms of quality, condition, and even safety. If your roof doesn’t need replacement, expect an appraisal drop.
- Exterior walls: Material and condition
- Rooftop: Roof style, material, and condition
- Windows: Type of windows and presence of screens, and insulation
- Outdoor fitness: Pool, outdoor fireplace, or other types of fitness
Foundation and Attic
Last in the enumeration of physical characteristics is the actual foundation itself, which may become a safety issue if given improper maintenance or needs repair. Also, a home appraisers look into the attic and the basement. Having a finished attic or basement will increase the appraisal value as well as bring additional square footage to the livable area in the home.
- Concrete foundation: Foundation type and its condition
- Basement: Finished or unfinished
- Attic: Finished or unfinished
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Appraisal for Refinance Is the Same as House Appraisals
The general value process will be the same for a home appraiser, whether one is refinancing or buying a mortgage. From the appraisal point of view, property characteristics would be the same for both types of appraisal, and the same URAR form to be used for purchase loans will be adopted in drawing out the value of the home.
Thus, refinancing could be ordered by the lender and underwrites their appraisal for them in their loan program, particularly with respect to loans being refinanced. In some cases, however, a complete appraisal may not really be necessary. The bank will follow its underwriting guidelines, which could lead to a limited appraisal, for example, an appraisal performed by a third party, like a real estate agent, or a drive-by appraisal, meaning the one inspecting only examines the exterior of the house.
A Home Appraiser Does Not Take Into Account the Movable Features or the Decor
Real Estate agents usually prefer neutral decor because potential buyers would be able to visualize their belongings within the house. Yet, the overall aesthetics of the house are not necessarily high on the list of appraisers in terms of assigning value. A general rule of thumb is that if it is nailed down and you cannot take it out, it is considered part of the house.
An upgraded microwave adds no value since it is movable; the same for a utility shed or hot tub, even if these add value to your home, because you will probably include such in the sale.
If the house sale includes personal property, such as a boat for an attached dock, the seller should inform the appraiser.
Final Thought!
As far as the Banks are concerned, buying a house means having an appraisal for mortgage approval and valuing property on the right basis. A home appraiser has several perspectives while evaluating the physical condition of the property, internal and external features of the property, the nature of the foundation, and general comparable market approaches. Factors such as the number of bedrooms, roof type, energy-efficient upgrades, and finished spaces like attics or basements may also contribute to valuation. However, items that are movable and are generally perceived to be personal decorative items are not considered in the appraisal. The same process for acquisition and financing leads to a detailed appraisal providing lenders and homeowners with real worth values of the property.
Meridian Property Appraisers will provide accurate and credible home appraisal services to empower buyers, sellers, and homeowners with sound financial decisions. A certified appraisers consider every aspect that can influence your property value, both inside and outside. Whether you are buying, refinancing, or selling, we will always offer you the price and clarity that you seek. Book an appraisal with Meridian Property Appraisers today and find out your property’s true worth!
