14 Factors That Could Negatively Impact Your Home Appraisal

You've poured your heart and soul into your home, meticulously crafting it into your sanctuary. But when it comes time to sell, a dreaded word hangs in the air: appraisal. Factors that could negatively impact your home appraisal are a common concern, and what if the number doesn't reflect the love and sweat equity you've invested in?

The truth is that a seemingly minor detail, an overlooked quirk, or even a well-intentioned upgrade can throw off an appraiser's calculations, leaving you with a disappointing valuation. This post delves into the surprising factors that can affect a home appraisal, giving you the tools to avoid costly surprises and maximize your selling potential.

14 Surprising Factors That Can Affect a Home Appraisal

Keeping the difference between home appraisal and home inspection in mind, these are predictable and surprising factors that can affect a home appraisal:

 

1. Home Location

Your home's location plays a crucial role in determining its appraised value. The appraiser considers the neighborhood. A desirable neighborhood has good schools, amenities, and even low crime rates that command higher prices.

There are also recent sale prices of comparable homes in your area. And if values are rising, it will benefit your appraisal. You should think about zoning too, as restrictive zoning laws that limit development can increase property value.

Environmental factors are also among the factors that could negatively impact your home appraisal. Locations with stunning views, and proximity to lakes, rivers, or mountains often attract premium prices. While homes in areas prone to natural disasters (especially floods), air or noise pollution decreases in property value.

How to Improve It:

You can't change your home's location, but there are a few steps to potentially influence its appraisal. Some of your options include improving the curb appeal and/or upgrading interior features.

 

2. Home Age

When you realize what is a home appraisal, you’ll know that a home’s age significantly influences its appraisal value.

Older buildings generally receive lower appraisals than newer ones due to their maintenance needs, outdated features, and depreciation, which can be unappealing and costly for potential buyers.

How to Improve It:

There is no reversing time, but a well-maintained older home with modern upgrades can compete with newer properties and potentially achieve a higher appraisal. So, you may be able to counter the effects of age by regular maintenance, modern updates, and improving energy efficiency.

 

3. Home Size and Layout

In this case, size does matter.  Larger homes generally command higher appraisals due to increased square footage, often associated with more amenities and living space. However, size alone isn't everything; the layout is also crucial.

A functional layout, open-concept living spaces, bedrooms, and bathrooms are some of the surprising factors that can affect a home appraisal in this case.

How to Improve It:

If your home is just oversized (without a perfect house plan) or has fewer bedrooms/bathrooms, consider renovating to create a more efficient layout or adding a bathroom if possible. You can also focus on your home's unique strengths, such as a stunning kitchen, a finished basement, or a large backyard.

 

4. Poor Construction and Structural Issues

When it comes to structural and foundation issues, appraisers are trained to identify potential problems, such as cracks in walls, uneven floors, or signs of settlement, which can indicate underlying structural instability.

These issues raise concerns about the home's safety and longevity, making it less desirable to buyers. Appraisers also factor in the cost of repairs needed to address the issues. Significant repair expenses reduce the net value for potential buyers.

How to Improve It:

Consider hiring a professional home inspector to identify structural deficiencies and recommend necessary repairs. If possible, also invest in quality renovations and upgrades to improve the overall condition of the home and potentially increase its appraisal value.

 

5. Outdated Interior and Appliances

Imagine your home as a stage, and your interior as the set. A well-kept-up, modern set draws in the audience, while an outdated one shows neglect, casting a shadow over the entire performance. Outdated interiors and appliances play a similar role and are among the factors that could negatively impact your home appraisal.

A dated kitchen with avocado green cabinets, old HVAC, or a bathroom sporting a 1980s bathtub can leave appraisers and potential buyers feeling like they've stepped back in time. This lack of contemporary appeal can negatively impact your home's perceived value.

How to Improve It:

By investing in thoughtful updates, you can breathe life into your outdated interior. Consider updating the most visible areas: the kitchen, bathrooms, and the main living spaces. Prioritize functionality and think about adding a wow factor that an average buyer finds interesting.

Keep in mind that a complete overhaul isn't always necessary.  Small updates can make a big difference too.

 

6. Pest Infestation or Damage

When asking “What negatively affects home appraisal?”, this is one of the definite answers. Termite trails, rodent droppings, or the telltale holes in your walls speak volumes about the invisible enemy lurking within. These signs signal a potential for structural damage and health concerns, both of which drive down the appraisal value.

How to Improve It:

Contact a licensed pest control company to address the infestation, and fix any structural damage caused by pests. And if the appraiser finds out about the problem before you do, provide them with the pest control report and repair receipts. This shows that the problem has been resolved and your home is safe and sound.

 

7. Parking, Garage, and Storage

Lack of parking, garage, and storage (such as closets) are other surprising factors that can affect a home appraisal, particularly in urban areas where these features are highly sought after.

Think about a lack of designated parking as an example. This can significantly decrease a home's appeal, especially in areas with limited street parking or strict parking regulations. Appraisers consider this a major drawback, as it reduces convenience and desirability for potential buyers.

A garage adds significant value as well, offering storage space, protection from the elements, and a secure area for vehicles. Limited storage space can be a deal-breaker for many buyers too, more so in smaller homes. 

How to Improve It:

If street parking is readily available and safe, highlight this to the appraiser.  If possible, explore off-street parking options like a driveway (even a small driveway adds value), carport, or shared parking. If your home doesn't have a garage, emphasize other adequate storage space, like a large basement or attic, or consider adding one.

 

8. Curb Appeal

Curb appeal acts as the first impression for both appraisers and potential buyers. An attractive exterior can lead to a higher appraisal, while a neglected one can lower it.

Good curb appeal signals that the home has been maintained and is likely in good condition overall. This can lead to a higher perceived value, even if the interior is standard.

How to Improve It:

To create a positive impression, you can mow the lawn, trim bushes, weed the gardens, freshen up the paint on your house, repair cracks and holes, install exterior lighting, and remove unnecessary items for a more organized look. If you can outshine other houses in the neighborhood, this factor wouldn’t hurt the appraisal.

 

9. Over Personalization

Having a truly unique home can be a double-edged sword when it comes to appraisal. While it is a source of charm and individuality for you, it might present challenges for potential buyers and even appraisers. Allow us to elaborate.

Appraisers rely on comparable properties (comps) to determine a fair market value. If your home is truly over-personalized, finding suitable comps can be challenging. This may lead to more subjective appraisal methods, potentially resulting in a lower or higher valuation than expected.

Unique homes appeal to a smaller pool of buyers too, as they might be seeking a specific (or the general) aesthetic or functionality. This limited market can affect selling time and price negotiations.

Your home may attract a niche audience, but there's also the risk of an overvaluation based on sentimental value rather than objective market data. This can be problematic if you need to sell quickly or if the market shifts.

How to Improve It:

If your customizations aren’t drastic, you may want to change them back; if you have a home office, it should look like a bedroom before appraisal. If not, you can always prepare a detailed portfolio highlighting your home's unique features and their potential benefits.

Choosing an experienced appraiser can help too.  They will understand the need for more subjective analysis and have a better understanding of how similar homes have performed in the market.

 

10. Illegal Modifications

Illegal modifications or additions (including unpermitted DIY renovations, knob and tube wiring, etc.) are obvious factors that could negatively impact your home appraisal, raising safety concerns, legal complications, and insurance issues.

They can also make it challenging to sell the property, since any potential buyer may be hesitant to purchase a property with known legal or safety concerns.

How to Improve It:

If feasible, explore options for legalizing the modifications.  This may involve obtaining the necessary permits, making required changes to bring the modifications into compliance with building codes, and undergoing inspections.

Address any safety issues as well. Make repairs or upgrades to bring the property up to code, which will improve its overall condition and safety for future buyers.

 

11. Economic and Market Conditions

When homeowners ask what negatively affects home appraisal? They mostly want to hear about factors that are under their control. But this isn’t one of them.

Economic and market conditions such as interest rates, inflation, economic growth, inventory levels, and local market trends, all play a role in determining a home's appraisal value.

How to Improve It:

Understanding these influences helps you navigate the appraisal process and make informed decisions regarding your property. So, make sure to stay informed, consider market timing, prepare for potential changes, and seek advice from experienced real estate agents, appraisers, and financial advisors.

 

12. Appraiser Knowledge and Experience

You're right to be mindful of the appraiser's knowledge and experience. An appraiser's deep understanding of your neighborhood, recent sales, and local market trends is crucial. A lack of local knowledge could lead to inaccurate comparisons with unsuitable properties, affecting the final appraisal.

A seasoned appraiser considers the property type, as well as choosing the most appropriate method for your property, ensuring a fair and realistic valuation.

How to Improve It:

Before hiring an appraiser (certified by AIC or CNAA), spend time researching those with experience in your area and property type. Interview potential candidates, asking about their local expertise, methods, and experience with comparable properties. Be prepared to give them detailed information and documents about your home.

 

13. Too Much Clutter

Does cleanliness affect a home appraisal? Absolutely. Extreme clutter can obstruct the appraiser's ability to thoroughly inspect the property, including structural elements, finishes, and potential issues. They may struggle to assess the size of rooms, identify hidden damage, or get an accurate sense of the overall condition.

It has a negative impression as well, suggesting potential maintenance issues, disorganization, and even neglect. This can lead to a lower appraisal than a similar property in a well-maintained, decluttered state.

How to Improve It:

Decluttering, depersonalizing, and deep cleaning are among the easiest steps to take. Consider temporary storage options for belongings that can't be removed permanently. And don't forget the exterior.

 

14. Race and Ethnicity

This is one of the truly surprising factors that can affect a home appraisal. According to FastExpert, sadly, implicit bias about race and ethnicity can affect this process.

This means that unconscious stereotypes and prejudices can influence an appraiser's judgment. This leads to lower valuations for homes in predominantly minority neighborhoods, and homes that are owned by black and Latino families

How to Improve It:

It is always a good idea to research the appraiser’s experience and track record before hiring. And if you still suspect bias, consider getting a second appraisal from a different qualified appraiser.

 

---

Appraisers consider a wide range of factors when determining a property's value including its square footage, overall layout (plus above-ground and basement areas), materials and construction quality, amenities with added value, market conditions, environmental factors, etc.

By considering all the factors that could negatively impact your home appraisal and addressing the potential issues, an appraiser will provide you with a realistic and unbiased estimate of your property's worth, ensuring fairness and transparency in real estate transactions.