What Hurts a Home Appraisal? 16 Factors That Can Bring the Value Down

What do appraisers consider?

Generally, appraisers will follow the Uniform Residential Appraisal Report, a standardized form that helps appraisers evaluate a property based on its characteristics.

The report categorizes an appraiser’s evaluation into a few main categories, including neighborhood, site, and improvements. Here are some of the main boxes an appraiser will be checking and commenting on in their report.

Neighborhood conditions

• Are property values in the area increasing, stable, or declining?
• Is there a shortage, balance, or oversupply of homes?
• Is the location urban, suburban, or rural?
• Is growth in the area rapid, stable, or slow?

Site conditions

• What’s the zoning classification and description?
• Is the zoning compliance legal?
• Are utilities electric or gas? Are they connected to the public?
• Are water and sewer connected to the public?
• Is the property in a flood zone?

Improvements

• What’s the total square feet of above-grade gross living area?
• How old is the home?
• What’s the total number of rooms, bedrooms, and baths?
• What’s the foundation type? Is there evidence of dampness or settlement?
• Is there a crawl space, partial basement, or full basement?
• Is there an attic?
• Is there evidence of infestation?
• Does it have a sump pump?
• What’s the condition of the property?
• Are there any physical deficiencies that affect the livability, soundness, or structural integrity of the property?
• What is the condition of the interior — floors, walls, trim, and finish?
• Is there a garage and how many cars can it fit?
• How does the exterior look? Are there any issues with the foundation walls, exterior walls, roof surface, gutters and downspouts, windows, and screens?
• Is there a fireplace, patio/deck, pool, woodstove, fence, or porch?
• Which appliances does the home include?

An appraiser will compile these findings as well as required exhibits including a street map showing the location of the subject property, an exterior building sketch, clear photos, and any other necessary data.

The most common appraisal method appraisers use is the sales comparison approach, which involves taking a look at recently sold properties in the area with similar characteristics, and then adjusting the dollar value of the subject property based on competitive differences.

What hurts a home appraisal?

Let’s review some of the top factors that can result in a lower appraised value for your home.

1. Less desirable location

Neighborhood characteristics such as whether the area is growing rapidly or slowly will be directly addressed on the appraisal report.

In addition, buyers gravitate toward areas with desirable traits, such as quality schools, walking trails, parks, and quick access to shopping and restaurants, which drives up the values of comparable properties or “comps” in the area.

Homes located where there’s a high level of crime or low-rated schools will likely be valued lower by comparison. Nearby eyesores or high noise levels can also lower your home’s appraised value.

“If you’re in Beverly Hills, I can tell you it has a definite impact,” Ford says. He likened the noise level about a block from the freeway to “the Grand Prix at Monaco.” Sellers in that location could have a home valued 10% to 20% less than others several blocks away, Ford says.

Relatedly, a high volume of short-term rentals, especially if they are poorly managed (-10% to -15% in value) and known health risks, such as proximity to a fracking site (-24% in value) are additional location factors that can affect your appraisal.

2. Slow real estate market

An appraiser will also take local market conditions into account.

If property values are declining, there’s an oversupply of homes, and houses are taking more than six months to sell, this could indicate a real estate market with weak demand that translates as lower property values.

A high volume of distressed properties in your area could also suppress price growth, and ongoing downtrends in the market could require an appraiser to adjust appropriately for comparable transactions.

While the real estate market remains strong in 2024, rising interest rates have contributed to a rebalancing of the market, giving buyers relatively more leverage than they had when conditions strongly favored sellers,

3. Poor layout

Depending on when your home was constructed, your floor plan may be more compartmentalized compared to the open layouts popular in today’s modern builds.

The appraisal report gives the author an opportunity to include a sketch to show if a property’s floor plan is “atypical or functionally obsolete, thus limiting the market appeal for the property in comparison to competitive properties in the neighborhood.”

So yes, it’s possible that your appraiser will throw shade at your closed-off kitchen or bedrooms that hang right off the dining area. But such arrangements won’t always bring your appraisal down, according to Tom Heuser, a top-selling real estate agent in Las Vegas.

“If we’ve found a buyer that’s willing to buy a house at a certain price, we’ve kind of gotten through that ‘functional obsolescence,’” he says, adding that he’s more likely to see an appraiser reduce value for an unusual layout when someone refinances a home.

4. Lack of curb appeal

You can’t necessarily put a price on curb appeal through quantitative appraisal methods, but appraisers do take it into account qualitatively when reconciling that final value, according to Ford, the long-time appraiser in Southern California.

If you’re debating whether to mow the lawn, spruce up your landscaping, or add some colorful planters, consider this your cue to head to The Home Depot and grab some compost bags. You don’t have to invest a lot, either. Basic yard care, like mowing and fertilizing the lawn, and controlling weeds, costs about $340 but yields a 539% ROI, our research shows. Add about three cubic yards of bark mulch at about $275 and reap a 536% ROI.

5. Dated interior

There’s a section on the appraisal report that reads: “Describe the condition of the property (including needed repairs, deterioration, renovations, remodeling, etc.).”

Schley, the president of the Appraisal Institute, says an appraiser will look to see if any areas of your home, particularly the kitchen and bathrooms, will need any remodeling in the near future. If so, that likely will decrease your home’s value.

An appraiser will note a particular value for high-end kitchen appliances or quartz countertops, for instance. But if you have “undesirable finishes,” such as green quartz or white appliances instead of stainless steel, that’s where you might get dinged, in Heuser’s experience.

“They’re still the same high-end appliances, but buyers are saying, ‘I don’t want white appliances; I don’t care how good they are. I have to replace these, and I have to replace that green quartz,’” Heuser adds.

Buyers who appreciate the craftsmanship of an older home still like to see touches that reflect current times. “A 1970s home that’s been well-kept will sell amazingly well,” adds Mason Spurgeon, a certified general real estate appraiser since 2004 who handles appraisals in Missouri, Illinois, and Iowa.

6. Pest infestation or damage

You definitely don’t want the appraiser to check “yes” in the box recording whether there’s evidence of an infestation. Mice droppings in the basement, or hollowed or damaged wood from termites — these are major issues to address before an appraiser ever comes through your home. If you suspect a pest problem, hire the appropriate professional for an evaluation. Then, pay to take care of the problem and obtain a certification that the issue has been addressed.

7. Old or broken HVAC

People need adequate heating and cooling to live comfortably in a home. A faulty HVAC system will be an obvious problem. But an older HVAC can bring down your appraised value as well, especially if neighboring homes have newer units. An appraiser may consider if your HVAC is past its estimated lifespan. The average cost of replacing an HVAC system is roughly $9,171, which homebuyers will not want to pay a few months after move-in if they can avoid it.

8. Structural or foundation issues

When it comes to major issues like a cracked foundation, it’s better to be upfront with the appraiser about what you know. That means giving the appraiser any bids or estimates for the work. An appraiser can factor that cost into their calculations instead of using a more general figure, which may skew high.

“Don’t try to withhold information because you’re afraid to tell us, and we have to guess,” Spurgeon says. “We can sort out what we need and don’t need. The more forthcoming and honest you are, the less likely we are to keep digging.”

9. Poor quality construction

An appraiser is going to look at the materials of your home and the workmanship to provide a quality rating to your appraisal. Lower ratings will be given to homes with “basic finishes, inexpensive stock materials, and limited refinements and upgrades,” according to Fannie Mae.

If there’s evidence that the builder who built the home was professionally unskilled or the home has poor quality mechanical systems such as electrical and plumbing, that will also affect the quality rating. An appraiser also will factor in how the quality of materials and workmanship for your home compares to that of your neighbors.

10. Older age

Age is just a number. Whether an appraiser makes adjustments based on your property’s older age depends on how well you’ve kept up with the home and if you’ve done any renovations.

If the home has been renovated to a degree that is comparable to younger homes, you may not see a value reduction despite there being a large age gap. “Appraisers compare the age and condition of the subject property to similar properties in the area, and then make adjustments accordingly. For example, if the subject property is 10 years older than a comparable property, the appraiser may make a 5% adjustment to account for the difference in age and condition,” according to Faster Capital.

However, if the house is showing some pretty serious signs of wear and tear, that will likely require an adjustment if neighborhoring properties remain in newer and better condition.

11. Fewer beds and baths

If a home has fewer bedrooms and bathrooms, that usually translates as less square footage, which is one of the major factors appraisers consider in their calculations, Schley says. If your home has ample square footage but fewer bedrooms than is typical for the area, that also can lower your appraised value, as it might mean a potential buyer will want to reconfigure the property in the future.

12. Extreme clutter or signs of neglect

A stray sock or a bit of clutter isn’t going to tank your home appraisal since appraisers are trained to look beyond the mess. However, it’s never a bad plan to tidy up, put dishes in the dishwasher, vacuum, and clear countertops before an appraiser comes through your home.

It’s also practical to show a clean home — you want to make sure an appraiser is able to easily access each part of the property so they can take photos and accurately measure. A severely cluttered home may prevent an appraiser from accessing certain parts of the home, affecting the appraisal. Additionally, signs of neglect such as peeling paint or mold may negatively affect your home’s value.

13. Lack of amenities

HomeLight’s Top Agent Insights for End of Year 2023 found that real estate agents cite outdoor living areas as the third largest priority among today’s homebuyers, second only to a home office and updated kitchen appliances. An appraiser will mark whether a home has a patio/deck, pool, fence, porch, or other similar amenity.

These features tend to add the most value in areas that have median to upper-end housing with larger lots, or where yards provide enough room for outdoor seating or a swimming pool without feeling cramped. If your neighbors have these amenities but your home lacks them, it could lower your appraised value. Our research shows that the following outdoor amenities have risen in value in 2024:

• Pools (add an estimated $28,000 in home value)
• Outdoor kitchens (increasing your home’s monetary value by between 60% and 100% of the money you put into it)
• Decks (A deck installation can return anywhere from 40% to 50% of its value when you sell the home.)

14. Flood zone classification

Appraisers will investigate a home’s flood risk as part of their assessment. They will record whether the home is in a FEMA (Federal Emergency Management Agency) Special Flood Hazard Area and the FEMA Map # for the property.

Generally, a house classified as being in floodplain that requires flood insurance is going to be worth less (though waterfront properties tend to be a notable exception).

According to a study by the National Bureau of Economic Research, homes located within the 100-year floodplain are valued between 4.4% and 13.3% less than similar homes outside this flood zone. This reduction in value is mainly due to the perceived threat of flooding and the costs that come with it.

FEMA re-surveys areas from time to time and your zone may have changed. It’s advisable to check your zone again if you plan to sell your home, as projected floodplains are anticipated to grow by up to 45% by 2100.

15. No parking

An appraiser will mark whether your home has a driveway, garage, carport, or no car storage and will specify the total number of parking spots available. If you’re a single-garage home in a two-garage neighborhood, that’s likely going to require an adjustment on the appraisal. But if you’re in an urban setting where no one has parking, then that’s another story.

16. Old comps, or appraiser lacks local knowledge

Sometimes an appraiser works outside a regular coverage area, so they’re not as familiar with the market conditions and previous sales in that area — something Spurgeon, our Midwestern appraiser, calls “geographic competency.”

An example of where this might come into play is a location where the residents know about an Amazon.com distribution center being built. “The market’s jumping like crazy,” Spurgeon says, but if you happen to get an appraiser unfamiliar with this news, “he may pull sales that are too old.”

You likely can’t choose which appraiser visits your home, however, Spurgeon says the professionals he knows take the time to ask colleagues about an area that’s new to them. So it’s helpful to ask your appraiser if he’s familiar with the neighborhood or has any contacts he can use for research.

What can hurt an FHA or VA appraisal?

If you’re buying a home with an FHA or VA loan — or selling to a buyer who is using one of these loan types — you have a little more to think about, says Kim Spear, a top real estate agent in Ashburn, Virginia. FHA and VA loans make homeownership more attainable, but they also come with stricter appraisal requirements that essentially require a “mini home inspection,” she says.

The Department of Housing and Urban Development (HUD) has minimum property requirements (MPRs) that a licensed FHA appraiser needs to consider. As for VA loans, the MPRs are similar and put your home under a more thorough evaluation. Here are some of the main things an appraiser will look for with these loan types:

• Chipped lead-based paint
• Lack of proper drainage
• Water leaks or poor water pressure
• Leak or major repairs in roof
• Working utilities such as heat, sewer, and water
• No “operable or useful” features, such as a roof or appliance that needs to be replaced in the next two years
• No hazardous soil contaminants like strong odors or pools of liquid

How to skip the appraisal

No matter the circumstances, the appraisal process can be daunting and stressful. Most likely, your sale, refinance, or home purchase will go more smoothly if the home appraises at a certain amount.

One way to avoid appraisal hiccups is to work with a real estate cash buyer. A cash offer eliminates the need for the lender-ordered appraisal and usually speeds up the closing timeline significantly.

If you’re interested in a low-hassle transaction that removes the risk of an appraisal coming in under contract value, consider requesting a cash offer from HomeLight’s Simple Sale platform.

Enter your address and provide some basic information about your property, and HomeLight will provide you with a cash offer within 24 hours.

Otherwise, review these 16 factors that can hurt a home appraisal and be aware of them going into your home’s evaluation. Recognize that some aspects will be out of your control, and clear the way to make the appraiser’s job easy wherever possible.

Header Image Source: (Alexey Suslyakov / Unsplash)