Advice from Real Estate Experts: Tips for Sellers on Home Appraisals

5. Make sure your ADUs, additional bedrooms, finished attics, and finished basements meet legal requirements

In an appraisal, bonus rooms and bedrooms must meet legal requirements to contribute to the home’s value. So don’t bother throwing a twin mattress in a walk-in closet to raise your bedroom count.

In an appraisal, bedrooms must meet the following legal requirements:

• “Finished” design features (e.g., flooring, walls, lighting, etc.)
• Windows with dimensions meeting your local building code.
• A minimum size of 70 square feet with seven-foot-high ceilings.
• Proper ventilation and heating.
• Two means of egress.
• All features are built to code.
• If applicable, the home’s septic tank capacity needs to be large enough to support the additional bedroom.

Home additions and accessory dwelling units (ADUs) (e.g., guest houses and granny-flats) must also be permitted and meet legal requirements. Additions built without a permit are illegal and therefore not included in the square footage of your home. A retroactive permit could bring your ADU into compliance, and while it might take time and money, it would allow the unit’s square footage to factor into your home’s value.

6. Check public records for discrepancies with your home’s square footage

In a traditional appraisal, the appraiser calculates the home’s square footage by hand. In a drive-by appraisal, appraisers use public records to estimate a home’s square footage without manual measurement. However, this method can be less accurate due to potentially outdated or incorrect property details in public records. Inaccuracies may arise from permit backlogs, clerical errors, or unpermitted changes in square footage, such as finishing or converting a garage.

Keep in mind Heward’s description of appraisers as “reporters.” Public records are a reporter’s best friend, and there’s no reason they shouldn’t be yours, too. If there are discrepancies with your home’s square footage, conduct your own investigation by consulting the public records and searching for divergence. If you believe the number falls short, insist on a traditional appraisal, so the appraiser can measure the true square footage and report it to the city.

7. Provide copies of any homeowners’ association or condominium covenants and fees

Transparency is the name of the game when it comes to your home appraisal process, and that includes being crystal clear about HOA fees and the like. New owners need to know about any rules or restrictions they will need to abide by, as well as the details of any dues or fees. HOA and other community fees are especially important to the buyer’s lender, who needs to ensure the buyer can afford the fees on top of their mortgage.

“For mortgage lending, there are specific questions related to budget, and if the fees are typical, as well as the amount of parking, etcetera. The HOA documents should provide a lot of information and should be provided to the appraiser,” says Massey. Appraisers also include the HOA details in the appraisal, so lenders can evaluate the financial state of the HOA. If the HOA isn’t in good financial standing, the lender will need to know if the HOA may require homeowners to pay a higher monthly fee down the line, as this could impact the buyer’s ability to pay their mortgage.

“The mortgage company wants to know if [an HOA] owes money over on the side. That’s important,” says Miller. They also want to know if an assessment is coming up. If so, a seller may agree to pay the assessment before the sale closes.

In a special assessment, an HOA requires the homeowner to front the cost of a renovation (like a new roof) or to replenish the association’s coffers. The lender needs to know if the buyer has funds to cover the special assessment cost, since these can run thousands of dollars.

8. Provide information on your solar panels

Solar energy is gaining popularity in American homes, especially in the past decade, with a rising trend in residential solar power. According to a 2022 EcoWatch survey, 1 in 4 homeowners plan to install solar by 2028. To streamline your appraisal and closing process, be sure to provide your appraiser with detailed information about your solar system, including lease agreements or purchase receipts. A lack of documentation could potentially slow down the appraisal and closing.

Leased solar panels do not add value to your home

Heward explains: “If your panels are on lease, they’re considered ‘personal property,’ not [a part of the] real property.” That means an appraiser will not consider the monetary value of your panels when evaluating your home.

In fact, Heward warns that a leased system can even act as a detriment in your appraisal in some markets. In order for a buyer to keep a leased solar panel system, they will need to qualify for the lease. That reduces their mortgage buying power, and depending on the area, an appraiser may take that lease payment into account.

Owned solar panels add value to your home

If you own your solar panel system, it’s considered a part of your property. The appraiser will value the system based on comps in your market.

“An appraiser will look at the market and be able to say, ‘30% of the houses in this particular area have owned solar panels, and they sold for 5% or 10% more than a house without solar did,’” Heward explains. In a place like the Valley of the Sun, where the solar market continues to grow, Heward shares that he’s seen an owned solar system increase a property’s value by as much as 3%.

9. Confirm the appraiser’s license and local experience

It’s important to work with top professionals at every step of the home selling process, and the appraisal is no exception. To earn a license, appraisers go through a state standardized training program. Still, home appraisal involves a degree of subjectivity, so it’s essential to find an appraiser with substantial experience appraising homes in your area. The more familiar an appraiser is with comps in your area, the more accurately they can assign value to your property’s upgrades and unique features.

Vet several home appraisers before you make a hiring decision. Search for candidates through The National Association of Real Estate Appraisers and the Appraisal Institute. Then ask your contenders the following questions:

• Are you licensed or certified in your state?
• What are your professional designations?
• How long have you been performing professional appraisals?
• What level of experience do you have in this particular market and this neighborhood?
• What experience do you have with properties like mine?

10. Tidy up your curb appeal

Appraisers pay attention to all of the features that add value to your home, and that includes curb appeal. While appraisers can’t necessarily put a price on curb appeal from a quantitative standpoint, they take it into account qualitatively when determining your home’s final value.

With this in mind, clean your home’s exterior and perform a basic lawn care service before the appraisal. Just remember not to run your sprinklers before the appraiser arrives. Appraisers need access to the perimeter of your house and won’t want to wade through mud to do so.

11. Provide the most recent property tax receipt or similar paperwork that contains the property’s legal description

The goal of an appraiser is to give an unbiased assessment of your property’s value. By providing your appraiser with additional public descriptions of your home, you can speed along the appraisal process by triangulating the facts. Legal descriptions, like those found in tax receipts or HOA documents, are particularly helpful because they are impartial statements.

12.  Clean your home’s interior thoroughly before the appraisal

Before the appraisal, clean and declutter your home as you would for a home showing with a buyer. While the appraiser won’t increase your property value due to cleanliness, they may more favorably assess the home if it’s in overall excellent condition. The appraiser will also appreciate a clean home that allows them to measure square footage more easily.

13. Tend to repair, especially if you’re selling to an FHA loan-backed buyer

Appraisers take your home’s condition into account and look for major issues that lower your home’s value. They’ll note the condition of major home systems, including the roof, HVAC, plumbing, and electrical. An appraisal for a conventional loan is less thorough than a home inspection, so if you’ve adequately prepared for the home inspection, you should be clear.

“The impact on value is probably minimal. Where the impact is whether or not [the buyer] can actually get a loan,” Heward notes. If you’re keen to close, it’s worth taking care of these repairs before your appraisal.

If you have an FHA loan-backed buyer, an official FHA loan appraiser must conduct the appraisal, following HUD’s designated guidelines. In the FHA appraisal process, sellers must complete repairs that are “necessary to maintain the safety, security, and soundness of the Property, preserve the continued marketability of the property, and protect the health and safety of the occupants” for their buyer’s loan to close. Examples of necessary repairs include a leaking roof, foundation cracks, and inadequate forms of egress.

You’ll also need to ensure that all appliances included in the sale are operational. According to HUD, appliances include refrigerators, ranges, ovens, dishwashers, disposals, microwaves, washers, and dryers.

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