4 Surprising Factors That Can Affect a Home Appraisal

A home appraisal is a critical component in the real estate process, whether you're buying, selling, or refinancing a property. It's an unbiased professional assessment of a home's value conducted by a licensed appraiser. 

While many factors like location, size, and condition are commonly known to influence a home's appraisal value, there are several surprising factors that can also play a significant role. This article will explore four of these unexpected elements that can affect a home appraisal.

1. Landscaping and Curb Appeal

The exterior appearance of a home is often the first thing that catches the eye, whether it's a potential buyer or an appraiser. Landscaping and curb appeal are not merely aesthetic considerations; they can have a tangible impact on the value of a property. 

Here's a detailed look at how and why this happens:

A. First Impressions

First impressions are vital in many aspects of life, and real estate is no exception. The initial view of a home can set the tone for the entire appraisal.

A well-maintained exterior, fresh paint, clean walkways, and an inviting entrance can create a positive impression throughout the evaluation.

"Investing in quality siding and maintaining it properly can significantly enhance a home’s curb appeal and, subsequently, its value,” says Austin Skoog, the owner of Sky Side Exteriors, a siding company based in Kalispell, MT. “A well-maintained exterior not only makes a great first impression but also demonstrates to appraisers and potential buyers that the home is cared for and in good condition."

B. Quality of Landscaping

The quality of landscaping goes beyond just having a mowed lawn. Thoughtful design, mature trees, well-placed shrubs, and attractive flower beds can enhance the property's appeal. High-quality landscaping can add significant value to a home, sometimes as much as 10% or more.

• Mature Trees - Mature trees not only add beauty but also provide shade, which can reduce cooling costs in the summer. They can also act as windbreakers, reducing heating costs in the winter.

• Water Features - Water features like fountains or ponds can add a sense of luxury and tranquility to the property, potentially increasing its value.
• Outdoor Living Spaces - Well-designed patios, decks, and outdoor kitchens extend the living space and can make a property more desirable.

C. Maintenance

Regular maintenance is crucial to preserving the value added by quality landscaping. Neglected yards with overgrown bushes, dead plants, or visible debris can have the opposite effect, detracting from the home's value.

• Seasonal Care - Different plants require care at different times of the year. Regular seasonal maintenance ensures that the garden looks its best year-round.
• Professional Landscaping - Investing in professional landscaping services can ensure the yard is maintained to a high standard, potentially enhancing the home's value.

D. Environmental Considerations

Environmentally friendly landscaping, such as xeriscaping (using drought-resistant plants) or rain gardens, can appeal to eco-conscious buyers and add value to the property.

2. Local Market Trends

Local market trends can profoundly impact a home's appraisal value. While the condition and features of a property are essential, external factors related to the local real estate market can either boost or diminish its value. 

Here's an in-depth look at how local market trends influence home appraisals:

A. Neighborhood Comparables (Comps)

Appraisers often use recent sales of similar homes in the neighborhood, known as comparables or "comps," to determine a property's value. These comps can be affected by various local market trends:

• Nearby Foreclosures or Short Sales - Even if your home is in excellent condition, a nearby foreclosure or short sale can negatively impact your home's appraisal. These distressed sales often occur at lower prices, pulling down the average price in the area.
• Demand and Supply - A high demand for homes in a particular neighborhood and limited supply can drive up prices, positively affecting appraisals. Conversely, an oversupply of homes with low demand can lead to lower appraisal values.

B. Economic Factors

The broader economic environment in a locality can also influence home values:

• Employment Rates - Areas with strong job markets and low unemployment rates tend to have higher property values. Employment opportunities attract more residents, increasing demand for housing.
• Interest Rates - Prevailing interest rates can affect buyers' purchasing power. Lower interest rates often lead to increased home-buying activity, potentially boosting home values.
• Consumer Confidence - When consumers feel optimistic about the economy, they are more likely to make significant purchases like homes. This increased activity can lead to higher appraisal values.

C. Development and Infrastructure

The development of new amenities, such as shopping centers, parks, or schools, can enhance a neighborhood's appeal:

• Public Transportation - Access to public transportation can be a significant draw for many buyers, potentially increasing a home's value.
• School Quality - The reputation of local schools can greatly influence home values. Families often prioritize education, and homes in good school districts tend to appraise higher.
• Future Development Plans - Planned developments can either positively or negatively affect home values. For example, a new park might increase value, while a planned industrial site might decrease it.

3. Personal Property and Interior Design

While a home's structural integrity, size, and location are primary factors in an appraisal, the interior design and certain personal property can also influence the value. 

Here's a comprehensive look at how these aspects can affect a home appraisal:

A. Inclusion of Personal Property

Personal property typically doesn't factor into a home's appraisal value, but there are exceptions:

• High-End Appliances - If a home includes high-end or custom-built appliances that will remain with the property, they can add to the home's value. Stainless steel appliances, chef-grade stoves, and built-in refrigerators are examples.
• Custom-Built Furniture - Built-in bookshelves, custom cabinetry, or other permanent fixtures that are considered personal property can also affect the appraisal value.
• Outdoor Features - Items like a built-in grill, custom patio furniture, or a hot tub that are included in the sale can contribute to a higher appraisal.

B. Interior Design Choices

The interior design of a home can subtly influence an appraiser's perception of its value:

• Neutral and Timeless Designs - Neutral colors and timeless design choices often appeal to a broader audience and can create a positive impression during an appraisal.
• Trendy or Unique Designs - While trendy or unique designs might appeal to some buyers, they can be off-putting to others, including appraisers. Highly personalized design choices might limit the home's appeal.
• Quality of Materials and Craftsmanship - High-quality materials and craftsmanship in the home's interior, such as hardwood floors, granite countertops, or detailed molding, can enhance the property's value.
• Staging - Professionally staged homes that highlight the property's best features can create a favorable impression, potentially influencing the appraisal positively.

C. Maintenance and Cleanliness

The overall cleanliness and maintenance of the interior can also affect an appraisal:

• General Cleanliness - A clean and well-maintained interior shows that the property has been cared for, creating a positive impression.
• Repairs and Upgrades - Addressing necessary repairs and making thoughtful upgrades can enhance the home's value. Even small improvements like fresh paint or updated fixtures can make a difference.

4. Environmental Factors

Environmental factors are becoming increasingly important in the real estate market, and they can significantly impact a home's appraisal value. 

These factors provide a broader context for evaluating a property, from proximity to environmental hazards to energy efficiency. Here's a detailed look at how environmental factors influence home appraisals:

A. Proximity to Environmental Hazards

The location of a home relative to environmental hazards can greatly affect its value:

• Industrial Sites and Landfills - Homes located near industrial sites, landfills, or other potential sources of pollution may see a decrease in value due to concerns about air and water quality.
• Power Lines and Highways - Proximity to power lines or busy highways can be seen as a negative by some buyers and appraisers, potentially impacting the appraisal value.
• Flood Zones - Homes located in flood zones or areas prone to natural disasters may be appraised lower due to the increased risk and potential insurance costs.

B. Energy Efficiency

Energy-efficient features are becoming more sought after and can add value to a home:

• Solar Panels - Solar panels reduce energy costs and can increase a home's value, especially in markets where renewable energy is a priority.
• Energy-Efficient Appliances - Energy Star-rated appliances and energy-efficient HVAC systems can make a home more appealing to environmentally conscious buyers.
• Insulation and Windows - Well-insulated homes with energy-efficient windows can reduce heating and cooling costs, adding to the property's value.

C. Water Conservation

Features that promote water conservation can also positively impact a home's value:

• Drought-Resistant Landscaping - In drought-prone areas, xeriscaping or using native, drought-resistant plants can be a selling point.
• Water-Efficient Fixtures - Low-flow toilets, showerheads, and faucets can reduce water usage and appeal to eco-conscious buyers.

D. Environmental Certifications

Homes with certifications like LEED (Leadership in Energy and Environmental Design) can command higher appraisal values due to their verified environmental performance.

Final Thoughts

Understanding the myriad factors that can influence a home appraisal is crucial for homeowners looking to sell or refinance. While some elements, like the home's size and location, are expected, others, like the impact of nearby distressed sales or the timing of the appraisal, might come as a surprise. 

By being aware of these factors and proactively addressing any potential issues, homeowners can be better prepared for the appraisal process and ensure that their property is valued fairly.