During a home appraisal, a licensed appraiser conducts a thorough evaluation to determine the property’s fair market value, primarily for the benefit of the mortgage lender. The process involves both a physical inspection of the home and research into comparable properties in the area. Here’s what is typically checked during a home appraisal:
Physical Condition and Features of the Home
- General condition: The appraiser examines for any visible cracks, damages, leaks, water stains, or other signs of neglect that could affect habitability or value.
- Size and layout: This includes the square footage of the home, the number of bedrooms and bathrooms, and the overall floor plan.
- Foundation and roof: The type, quality, and condition of the foundation and roof are assessed for structural soundness.
- Interior and exterior finishes: Materials and condition of walls, floors, windows, doors, siding, and roofing are noted. Upgrades like hardwood floors, granite countertops, and modern appliances can add value.
- Systems: The quality and state of plumbing, electrical, heating, and cooling systems are reviewed.
- Amenities: Features such as fireplaces, pools, landscaping, garages, decks, and patios are considered.
- Basement and attic: Whether these areas are finished or unfinished, and their condition, can impact value.
Lot and Location
- Lot size and topography: The size and usability of the lot, and any unique topographical features.
- Neighborhood and location: Proximity to amenities like schools, hospitals, and public transport, as well as the general condition and desirability of the neighborhood.
- View and access: Positive or negative views, vehicular access, and any potential hazards or zoning issues.
Market Comparison and Analysis
- Comparable sales (“comps”): The appraiser researches recent sales of similar properties in the area to benchmark the home’s value. These comparables are typically sales closed within the last six months.
- Market trends: Local sales trends, price ranges, and real estate taxes compared to similar properties are also factored in.
Special Considerations for Certain Loans
- For FHA or USDA loans, additional checks may include:
- Proper drainage away from the home
- Handrails on steps and stairways
- Adequate ventilation in attics and crawlspaces
- Safety and code compliance of major systems.
What Is Not Checked
- Décor or cleanliness: Appraisers focus on fixed features and do not assess décor, cleanliness, or removable items.
- In-depth system inspection: Detailed assessments of mechanical systems and hidden defects are the domain of a home inspector, not an appraiser.
The appraiser compiles all findings into a standardized report, usually the Uniform Residential Appraisal Report (URAR), which is then provided to the lender and, upon request, the buyer or homeowner.
