What can hurt a home appraisal?

A home appraisal can play a major role when buying, selling, or refinancing a home. The appraiser provides an independent opinion of the property's market value, which can affect how much a lender is willing to lend.

While you can't control everything that influences an appraisal, you can address many property-condition issues before the appraiser arrives.

What to know

1. Poor curb appeal and exterior condition can hurt the overall impression of the property.
2. Deferred maintenance and numerous small repairs can add up.
3. An aging or damaged roof can affect condition, marketability, and financing.
4. Older HVAC, plumbing, and electrical systems may affect how the home compares with updated properties.
5. Structural problems and water damage can have a significant impact on value.
6. Termite or pest damage can create appraisal and underwriting concerns.
7. An outdated interior may compare less favorably with renovated homes.
8. Broken appliances and fixtures can signal poor maintenance.
9. Limited storage and poor functional utility can affect market appeal.
10. Unique properties can be harder to appraise because comparable sales may be limited.
11. Location and neighborhood characteristics can significantly affect market value.
12. A lack of good comparable sales can make it harder to support a higher value.
13. A declining or changing real estate market can lower appraised values even when the home itself hasn't changed.

What Does an Appraiser Look At?

An appraisal isn't simply about how attractive or clean a home looks. The appraiser evaluates the property and compares it with similar homes that have recently sold.

Important considerations include location, lot size, square footage, bedrooms and bathrooms, overall condition, construction quality, major systems, improvements, functional utility, comparable sales, and current market conditions.

1. Poor Curb Appeal and Exterior Condition

The appraiser begins evaluating the property before walking through the front door. Peeling paint, damaged siding, an overgrown yard, broken fencing, cracked walkways, roofing problems, and other visible maintenance issues can affect the property's overall condition assessment.

You don't need expensive landscaping. Mowing the lawn, trimming bushes, removing debris, cleaning the entrance, and repairing obvious exterior problems can make a difference.

2. Deferred Maintenance and Minor Repairs

One minor problem probably won't significantly affect an appraisal, but numerous small problems can indicate that the property hasn't been properly maintained.

Leaking faucets, cracked windows, damaged drywall, missing outlet covers, loose handrails, broken fixtures, peeling paint, damaged flooring, and torn screens are examples.

Before the appraisal, consider taking care of inexpensive repairs you've been putting off.

3. An Aging or Damaged Roof

A roof approaching the end of its useful life can affect the property's condition and marketability. Active leaks, missing shingles, or visible deterioration can create additional concerns.

Some loan programs also have minimum property-condition requirements that may need to be satisfied before closing.

If you've recently replaced the roof, provide documentation showing when the work was completed.

4. Old HVAC, Plumbing or Electrical Systems

Major systems can be expensive to replace. An older furnace or air-conditioning system doesn't automatically result in a lower value, but its age and condition may matter when your home is compared with recently updated properties.

If you've replaced the HVAC system, water heater, plumbing, electrical panel, or other major components, provide the appraiser with information about those improvements.

5. Structural Problems and Water Damage

Structural issues generally matter much more than cosmetic problems.

Foundation movement, significant cracks, roof damage, water intrusion, wood rot, drainage problems, and extensive moisture damage can affect the property's condition and potentially its value.

Water stains may also raise questions about an active or previously unrepaired leak. Correct the underlying problem when possible and keep documentation of completed repairs.

6. Termites and Other Pest Damage

Termites and other wood-destroying pests can cause significant property damage.

Visible evidence of an active infestation or previous structural damage may create appraisal or underwriting concerns. Depending on the loan program and circumstances, inspections, treatment, or repairs could be required.

Addressing suspected pest problems before the appraisal can help prevent last-minute complications.

7. Outdated Interior Condition

Appraisers aren't judging your decorating taste, but the home's overall condition and effective age can influence its market value.

A property with an updated kitchen, bathrooms, flooring, and major systems may sell for more than an otherwise comparable home that hasn't been updated in decades.

That doesn't mean you should remodel immediately before an appraisal. Instead, concentrate on maintenance and make sure the appraiser knows about improvements you've already completed.

8. Poorly Functioning Appliances and Fixtures

Built-in appliances and fixtures that are part of the property should generally operate properly.

A broken dishwasher, damaged cooktop, leaking plumbing fixture, or other obvious defect can contribute to the impression that maintenance has been neglected.

Check basic fixtures and systems before the appraisal and repair inexpensive problems when practical.

9. Limited Storage and Poor Functional Utility

Functionality matters to homebuyers and can influence market appeal.

Closets, pantry space, garages, and other storage areas contribute to a home's usefulness. You don't need to add storage before an appraisal, but making existing storage areas accessible can help the appraiser properly observe the property.

Excessive clutter can make it difficult to see important property features and condition.

10. An Unusual or Unique Property

Unique properties can be more difficult to appraise because there may be fewer comparable sales.

This can be an issue with very large custom homes, rural properties, unusual architectural designs, exceptionally large parcels, properties with multiple structures, or homes substantially larger or smaller than surrounding properties.

A shortage of comparable sales doesn't automatically mean the home is worth less—it can simply make determining and supporting its value more complicated.

11. Location and Neighborhood Factors

Location can have a major influence on market value.

Appraisers consider how buyers react to a property's surroundings. Busy roads, commercial properties, railroad tracks, nearby amenities, transportation, employment centers, and other neighborhood characteristics can influence value.

Unlike deferred maintenance, location isn't something a homeowner can repair. The appraiser evaluates how the market responds to those characteristics.

12. A Lack of Good Comparable Sales

Comparable sales, commonly called "comps," are one of the most important parts of a residential appraisal.

Appraisers generally look for recent sales similar in location, property type, square footage, lot size, age, bedroom and bathroom count, condition, quality, and amenities.

When there aren't enough good comparable sales, supporting the property's value can become more difficult. This is especially common with rural, unusual, or highly customized properties.

13. A Declining or Changing Real Estate Market

Your home's physical condition isn't the only thing that affects value. Current real estate market conditions matter too.

If similar homes are selling for less than they were several months earlier, the appraiser has to consider that market evidence.

Increasing inventory, longer marketing times, seller concessions, and price reductions can also indicate a changing market. That's why the same property could receive a different appraised value today than it did a year ago.

How to Prepare for Your Appraisal

You don't need to completely renovate your home. Concentrate on the basics: fix obvious maintenance problems, clean up the exterior, make all areas of the property accessible, and prepare a list of significant improvements you've completed.

Include approximate dates for major improvements such as a new roof, HVAC system, windows, kitchen or bathroom remodel, plumbing work, or electrical upgrades.

Receipts, permits, warranties, and other documentation may also be helpful.

Cleanliness vs. Condition

A messy home isn't automatically worth less.

Appraisers aren't assigning value based on whether dishes are in the sink or beds are made. However, excessive clutter can make it harder to observe flooring, walls, storage areas, and other property features.

More importantly, there's a difference between messy and poorly maintained. Dirty carpet may be cosmetic, while damaged flooring is a condition issue. A cluttered bathroom is different from a leaking shower that has caused water damage.

Focus primarily on maintenance, accessibility, and the property's actual condition.

What Happens if the Appraisal Comes in Low?

A low appraisal doesn't necessarily mean the transaction is over.

Depending on the circumstances, possible solutions may include the buyer bringing in additional funds, the seller lowering the price, renegotiating the transaction, reviewing the appraisal for errors, providing additional comparable sales through the lender, or requesting a reconsideration of value when justified.

Can You Challenge a Low Appraisal?

Sometimes.

A strong reconsideration-of-value request should be based on facts rather than simply believing the property should be worth more.

Potential issues include incorrect square footage, an incorrect bedroom or bathroom count, missing property features, improvements that weren't considered, inaccurate information about comparable properties, or better and more relevant comparable sales.

Appraisal vs. Home Inspection

An appraisal and a home inspection serve different purposes.

An appraisal primarily determines market value for the lending transaction. A home inspection primarily evaluates the property's physical condition for the buyer.

There can be some overlap because an appraiser observes the property's condition, and certain loan programs have minimum property standards. However, an appraisal should not be considered a substitute for a professional home inspection.

The Bottom Line

You can't control every factor that affects your home's appraised value. You can't change the neighborhood, create better comparable sales, or control the direction of the local real estate market.

You can control how well your property is maintained and how effectively its improvements are documented.

Before the appraisal, focus on the basics: fix obvious problems, improve curb appeal, make the entire property accessible, and document major improvements.

And remember—a low appraisal doesn't always mean the loan is dead. An experienced mortgage professional can review the appraisal, identify possible errors or overlooked information, and help determine what options may be available to keep the transaction moving forward.