To secure a mortgage, a home appraisal is usually necessary to determine the property’s value.

This step ensures that the lender isn’t lending more money than the home is worth. However, there are four surprising factors that can affect a home appraisal. If the appraised value falls short of the expected amount, it can lead to complications that may even put the home sale at risk of not happening.

Understanding factors that can negatively and positively impact a home appraisal is essential when buying, selling or refinancing a home.

What is a home appraisal?

A home appraisal is a process that determines a home’s fair market value. It consists of a certified third-party appraiser reviewing the home, assigning it an appraised value and then comparing it to other homes in the area

An appraisal is typically required by the lender when someone is using a mortgage to purchase a home or refinance their current mortgage.

A home appraiser will typically take pictures of each room in the house. This helps them provide a visual of the property being appraised. That way, the appropriate parties will have a better understanding of each room’s condition and features when they review the report.

Purchase appraisal vs. Refinance appraisal

There aren’t many differences between a purchase appraisal and a refinance appraisal, which are both used to determine a home’s value. It’s worth noting, though, that while the buyer can’t attend an appraisal for a home sale, the homeowner is allowed to attend a refinance appraisal – which can be to their advantage.

If the homeowner does attend, they may be able to point out the best parts of the home and any work they’ve done or new features they’ve added – which could help the appraiser determine a higher home value.

4 surprising factors that can affect a home appraisal

When conducting a home appraisal, the appraiser will look at various aspects of your home and compare them to similar homes in the area. The professional will also consider what those homes have sold for.

Because your home’s value is based partly on the recent sales price of comparable properties nearby, the local market will have a big impact on your appraisal. Aside from major components such as the condition of the roof and location, there are also additional factors that might surprise you that could affect the value of your home.

Closets and storage

Closets can play a major role in appraisals. Older homes often feature smaller closets and less storage. Since adequate storage space is a must-have for many home buyers, a house with multiple or large walk-in closets, finished garages and finished basements can greatly enhance the property value.

Home appliances

Home appliances can affect your home appraisal as they’re considered fairly major components to a home. For example, if you have older appliances and even ones that don’t work, the future homeowner will need to pay to replace them. Or, higher end appliances could mean your home overall is perceived to have a higher value.

Curb appeal

Curb appeal plays a role in determining your home’s value, even if you don’t have a luxurious garden or a large swimming pool.

First impressions matter, and appraisers will start evaluating your home as soon as they arrive. Focus on improving your landscaping by keeping the lawn mowed, weeding the garden and painting the front door—these seemingly small factors can affect your home appraisal.

These simple steps can make a big impact on your home’s appearance.

Easily fixable conditions and systems

Even if you think it’s minor, systems and even fixtures that you can easily fix can affect your home appraisal. Items like fixtures, peeling paint and lighting may not have a huge impact compared to your home’s foundation, but it could signal a poorly maintained property. Taking the time to make easy fixes like giving the whole house a fresh coat of paint can help.

Other factors that may affect a home appraisal

Here are some other items that house appraisers consider that could affect the appraisal.

Home location

Where your home’s located could affect the overall value of your home. Home buyers are more likely to purchase homes in more desirable locations, with plenty of amenities, good schools and low crime areas. Even homes that have convenient access to various transportation options can also positively affect a home’s value.

Land size

The larger the lot your home sits on, the more your property could be worth. That’s because larger land size could affect how much more appealing it could be to buyers as well as the potential to add additional structures.

Number of bedrooms and bathrooms

The number of bedrooms and bathrooms is one of the major factors affecting a home’s value. In general, the more bedrooms and bathrooms there are, the more your home could be worth. Some reasons include the fact that it could appeal to more buyers and more rooms could affect the functionality of the home.

Square footage

In most cases, the home’s size is a major factor in a home appraisal. The more square footage your home has, the more likely it’ll be appraised at a higher value since there is more living space.

What negatively affects a home appraisal?

A major finding from CoreLogic’s 2024 property data: “8.6% of all home sales in the closing process were appraised below the contract sales price.”

Don’t want to fall victim to this statistic? Consider these factors before a home appraisal to avoid a gap.

Staying aware of market conditions in your area and knowing if your home has one of these common issues can help you understand what to expect when you have your appraisal completed.

Unique or rural homes

Assigning a value to unique houses or rural properties can be challenging due to a lack of comparable homes. In rural areas, a lower inventory of available properties can make it hard to find numerous recently sold homes. Unique homes are distinct by nature, complicating the search for similar properties.

When appraisers face this situation, they may have options such as looking for real estate comps in nearby competitive neighborhoods or evaluating a range of values instead of providing an exact figure. These estimates can be less precise, however, increasing the risk of a house being undervalued.

Outdated systems, appliances and interiors

Updating appliances or major systems such as plumbing, electrical or HVAC can be costly. If yours are outdated, it could affect the value of the home. If the interior hasn’t been changed for decades, it may not appeal to buyers, causing the value to decrease.

Outdated features such as these could also signal that the home has not been taken care of properly and that it has more issues than meets the eye.

Structural and other construction materials

Construction methods and materials have evolved over the years, with builders using new technologies that enhance a home’s strength, energy efficiency and safety. These improvements can increase a home’s value.

Some homes, particularly older homes, may contain outdated materials – such as asbestos and lead-based paint – that are considered hazardous. Even if outdated materials are safe, a lack of modern updates can result in lower energy efficiency and affect the home’s overall value – especially if it has old windows and doors.

Roof tiles and siding that are outdated, worn out or damaged can be pricey to fix. This could also be a major issue that can drive down the home’s appraised value.

Pest damage or infestation

One of the best ways to prepare for a home appraisal is to ensure your property is free from pest infestations or any past damage. While minor issues – such as a few anthills in the yard – may not raise concerns, the presence of pests such as termites or carpenter ants can significantly lower your appraised value.

Termite damage, in particular, can be permanent and jeopardize the home’s structural integrity. This can be hard to address once discovered in the home. Be sure to tackle these types of issues before the appraisal process begins.

Local market and location

Factors such as the local housing market and the home’s location are outside of your control. However, they still play a critical role in determining your home’s appraised value. Consider factors such as the neighborhood’s quality, the nearby schools and the area’s crime rate. If any of these are unfavorable, your home’s value may be lower than expected.

The state of the local real estate market can also vary greatly. For example, two identical homes can have vastly different values if they’re not in the same market.

Home size

Larger homes tend to have a higher value, but appraisers also evaluate whether a house is appropriately sized for its lot. A home that’s too large may leave minimal outdoor space, negatively affecting the appraisal.

While most homeowners believe bigger is better in the appraisal process, this mindset can sometimes backfire.

While you can’t change the age of your home, it’s important to recognize its impact on appraisal value. Older homes typically have a low value compared to newer constructions, which adhere to updated building codes and often have fewer issues. However, your home’s age could actually increase its value if the house is in a historic district.

How to prepare for a home appraisal

You won’t be able to change everything in your home before an appraisal. Some parts of the process will be out of your control. However, you can take these steps in an effort to prepare for a home appraisal:

• Do your own research. This should include the current market conditions and the recent sales price of similar nearby homes, which are referred to as comparables or comps.
• Provide proof of upgrades. If you’ve made upgrades to your home, show proof. Create a file that details all of these home improvements and includes sales receipts.
• Inspect the interior and exterior of the home. Examine the major systems and appliances in your home and note any areas of concern. If something needs to be repaired or updated, get it done before the appraisal.
• Make sure your decor and home improvements aren’t too personalized. You’ll want a potential buyer to be able to picture themselves in the home, and the appraiser will be able to sense when potential buyers won’t be able to do that.
• Clean up messes and clutter. A clean home free of clutter makes rooms look bigger and more spacious, allows the appraiser to better view the features of your home and shows you take care of the home.

If you have concerns about the potential for a low appraisal, talk with your real estate agent and see if there’s anything else you or they can do to prevent it from happening.

Purchase appraisal vs. refinance appraisal

There aren’t many differences between a purchase appraisal and a refinance appraisal, which are both used to determine a home’s value. It’s worth noting, though, that while the buyer can’t attend an appraisal for a home sale, the homeowner is allowed to attend a refinance appraisal – which can be to their advantage.

If the homeowner does attend, they may be able to point out the best parts of the home and any work they’ve done or new features they’ve added – which could help the appraiser determine a higher home value.

The bottom line: Understand what factors affect a home appraisal

An appraisal helps buyers ensure they’re paying a fair price for a home and helps prevent them from owing more on their loan than the home is worth.

Appraisals also help lenders determine how much money they can loan you for your purchase or refinance transaction. Knowing how to get the highest appraisal on your home and taking the right steps to prepare for a successful appraisal —including taking into account the four surprising factors that can affect a home appraisal —can help avoid any surprises whether you’re a buyer, seller, lender or homeowner looking to refinance.

If you’re ready to embark on the home buying or refinancing process, you can start your application with Rocket Mortgage^®.