What Do Interior Field Appraisers Look For In A House From The Outside?
Paul Fonseca, a top-selling real estate agent in Fort Myers, Florida, thinks that appraisers have a difficult job. They're in charge of determining the worth of a home in today's ever-changing housing market.
Residential house appraisers use a systematic assessment method to come up with an opinion of a home's market value, according to the Appraisal Institute. The Uniform Residential Appraisal Describe, developed by Fannie Mae and Freddie Mac, is used by most appraisers to report their conclusions (URAR).
With the help of six industry professionals, we'll explain what house appraisers look for when assessing your home. Here's a look at what's coming up:
- Appraisers examine the structural integrity of your home
- The value of your home is heavily influenced by its location
- Appraisers take into account both on-site and adjacent property features when determining the value of a property
- These are the elements that FHA appraisers check for
- Refinance appraisals work in the same way as home sales appraisals
- Moveable features and decor are not considered by appraisers
- You can appeal a poor evaluation, but the value of your home is unlikely to alter
Appraisers examine the structural integrity of your home
The general property qualities, such as construction materials and structural aspects, are assessed in the standard appraisal report. An appraiser uses the sales comparison approach to compare the qualities of the home to those of recently sold comparable properties.
When comparing two similar homes, for example, an appraiser may give a home with a two-car garage more value than a home with a one-car garage.
During interior field appraisals, appraisers are looking for the following characteristics:
Characteristics of the property
- Information about the size: The number of rooms, bedrooms, and bathrooms, in square feet, of the structure's living area above grade
- Driveway and garage The number of automobiles a garage can hold, whether it's detached or built-in, as well as the type of driveway surface
- Dwelling unit that is used as an add-on: Whether the ADU is permitted by zoning, and how the ADU affects the property's marketability and value
- Overall rating: The overall condition of the property, as well as whether it meets neighborhood standards
- Type and state of heating and cooling systems
- Materials and state of the floors
- Materials and state of the walls
- Condition and material of trim
- Appliances: A refrigerator, stove, oven, and dishwasher are all examples of appliances
- Features that are energy-saving: Certification for energy efficiency, tankless water heaters, and insulated ducts are just a few examples
Features on the surface
- Material and condition of external walls
- Roof: Material, condition, and type of roof
- Windows: The type of window, whether or not there are screens, and the amount of insulation are all factors to consider
- Pool, outdoor fireplace, or other outdoor amenities are available
Attic and foundations
- The type and quality of the foundation is important
- Basement: Whether it's finished or unfinished, the basement is the most important part of the house
- Finished or unfinished attic
Improvements, upgrades, and expansions are also taken into account by home appraisers
Mason Spurgeon, a licensed general appraiser and owner of Spurgeon Appraisals, says, “It makes sense that a newer or more upgraded property would sell higher than a similar but more outdated home.”
The most weight is placed on improved kitchens, bathrooms, and key components
According to Spurgeon, a recent remodel may boost your home's worth. "Updated kitchens and bathrooms have a substantial impact on the value of a home because these are the areas where a buyer would spend the most of their money if updates were needed."
Major components (expensive items like a new roof or air conditioning system) are particularly important, especially in older homes.
“A lot of times, an appraiser will come and look at an air conditioner and see the age on it, or they will check the permits when they pull permits,” explains Fonesca. "However, it's different when you tell them this was just installed, and it's a Trane air conditioner that cost $7,000." And we just paid this much for a new roof last year."
Swimming pools in the ground and porches may not contribute much to the value of a home
According to John Huston, a professional appraiser in St. Petersburg, Fla., who serves three counties and has evaluated over 3,800 properties since 1999, an in-ground swimming pool adds some value, but it depreciates in value due to the maintenance required.
To put it another way, a $120,000 in-ground pool does not guarantee a higher appraisal value than a $35,000 pool. “You won't get $120,000 for your pool if you resell it,” Fonseca predicted. "Each of you has a swimming pool that is in good working order." Who spent more money doesn't actually matter."
Additional features, according to Spurgeon, don't often bring much value. "Areas like porches, decks, and other outside living spaces have a smaller impact in our market," he says.
The value of your home is heavily influenced by its location
"Location, location, location," says Spurgeon, revealing the most important factor in determining the value of a home. While appraisers aren't required by Fannie Mae guidelines to grade or judge a neighborhood, they do look at objective facts regarding the home's location as well as any characteristics that may affect its value and marketability.
- Location: Whether the area is urban, rural, or suburban; the area's growth; and the density of the area
- Neighborhood attractiveness: Employers, services, and public transit are all within walking distance
- Conditions on the market: The marketing time for recent house sales, as well as whether prices and demand are increasing or falling
Appraisers take into account both on-site and adjacent property features when determining the value of a property
The lot's size, shape, and geography, as well as easements and encroachments, are all factors considered by appraisers. Aspects like street utilities and vehicular access will be noted by the appraiser. An assessment of whether the home's features are marketable is included as part of the appraisal procedure.
- Zoning refers to the property's zoning classification and whether or not it is suitable for lawful usage
- Specific dangers: Whether or not special hazards (such as environmental hazards) exist, and whether or not the hazard has an impact on the home's value or marketability
- FEMA flood zone: Whether or not the residence is located in a FEMA flood zone is an important consideration
- Improvements made off-site Streets, alleyways, sidewalks, lights, curbs, and gutters are all things to keep an eye on
- Conditions on the job: Any other site circumstances that may have an impact on the home's marketability and value
These are the elements that FHA appraisers check for
FHA appraisal criteria are harsher than traditional loan assessments, according to Bethany White, a top Virginia Beach agent with over 13 years of experience. FHA appraisers provide their assessment of a home's value, just like a conventional loan assessor. Unlike a normal loan assessment, however, FHA evaluators also check for health and safety issues.
While a traditional loan assessor may take into account a home's overall condition, FHA's criteria go even farther. Some of the FHA appraisal requirements that must be completed prior to closing are as follows:
- The appliances that are being sold must be in working order
- There should be no leaks or damage in the attic insulation. The attic space must also be well ventilated
- Water intrusion or standing water must be avoided in the crawl space
- Grading and drainage around the structure are required
- The electrical system must be appropriate for the structure's kind and in good working order
- A sturdy foundation is required for the house
- It is necessary to have working heating and cooling systems
- Chipped and peeling paint should be repaired as soon as possible, especially if lead paint is present (with homes built prior to 1978)
- It's essential that the plumbing is in good working order
- The roof's life expectancy must be at least two years
- A termite infestation must not be visible in the house
If the home doesn't meet all of the FHA's appraisal guidelines, the homeowner will need to make sure that all of the items in question are fixed before closing. "The appraiser has to go out and sign it," White explains.
Refinance appraisals work in the same way as home sales appraisals
From the perspective of an appraiser, whether refinancing or purchasing, the general appraisal method is the same. To determine a home's value, an appraiser looks at the same aspects in both types of appraisals. In fact, a full refinance appraiser uses the identical URAR form as a purchase loan appraiser.
If you're refinancing, your lender will order the assessment you'll need for your loan. A comprehensive assessment is not always required by the lender. A limited assessment, such as a drive-by or hybrid evaluation, may be required by a bank's underwriting criteria if the appraiser does not visit your property. "It truly depends on who's performing the refinance," White says. "It might be done differently in your bank."
Outside circumstances may influence whether or not your lender seeks a limited assessment - at least in the short term. During the pandemic, drive-by evaluations became popular, even for acquisitions, said to Jolene Jacobs, a top realtor who deals with 80% more single family homes than the average Royal Oak agent. And, due to a scarcity of appraisers in the Michigan area a few years ago, more drive-by appraisals were performed to meet demand.