10 Things The Appraiser Won’t Share with You

Last updated on April 4th, 2024 at 02:38 am

Are you having your home appraised? Be ready for a few surprises. Appraisers tend to keep quiet about their trade secrets, leaving many homeowners in the dark on certain topics. 

But not to worry—I’m revealing 10 things your appraiser most likely won’t share with you as a homeowner. 

Whether you’re buying, selling, refinancing, or just curious about your home’s worth, knowing a few of these extras can prepare you for your upcoming appraisal. 

So, what do appraisers keep on the down low? Let’s find out!

When it comes to revealing the appraised value of your home, appraisers need to stay tight-lipped.

Photo by Lukas

The appraiser’s role is to provide an unbiased opinion of your property’s worth, and discussing the value directly with homeowners can lead to undue influences or potential issues with the lender. (our client) However, this doesn’t mean you’re completely in the dark.

Lenders are obligated to provide home buyers with a full copy of their appraisal report. As a seller, you will likely be informed by the agent or lender about any issues and where the value came out. 

MORE ON APPRAISAL CONFIDENTIALITY

It’s natural to be curious about the appraisal process and want to know what the appraiser is doing and looking at. However, remember we need to focus and concentrate on all the minor details of your home in order to provide an accurate and thorough assessment of the property. 

Following the appraiser around the house or constantly asking questions can be distracting and hinder their ability to perform their job effectively!

Photo by Noelle Otto

Instead, trust that the appraiser is a trained professional who understands how to evaluate your property and knows exactly what they’re looking for. 

Give them the space and time they need to complete their assessment without interruptions. You can go over any questions or provide additional details after they’ve walked through the home at their own pace. 

RELATED: COMMON APPRAISAL QUESTIONS

If you’ve invested time and money into finishing your basement, you might expect it to be included in the overall square footage of your home. However, appraisers typically do not include any lower, below grade areas in the square footage calculation.

Basements are (in most cases) considered a separate level of the home and are valued differently than above-ground living spaces.

While a finished basement can certainly add value to your property, it’s important to understand that it may not be reflected in the home’s overall square footage.

Instead, appraisers will add value to the basement as a separate feature and evaluate it accordingly. 

During an appraisal, appraisers may note repairs or maintenance issues they observe in your home. However, these reports are typically provided to the lender, not to you directly at the time of the inspection visit. 

Once the lender has the full report, they will provide any repair requirements to the other parties.

The purpose of noting repairs is to inform the lender about any potential safety issues or lending criteria that may affect the property and its value.

If you’re planning to sell your home or refinance, it’s wise to address any repairs before the appraisal takes place, if possible. By proactively fixing issues, you can ensure a smoother appraisal process and potentially increase the value of your property. 

When it comes to the appearance of your home during an appraisal, don’t worry if everything is already packed up and the house is in disarray.

Photo by Andrea Piacquadio

Appraisers understand that homeowners often need to prepare for moving long before the closing date. 

Things being packed up, missing furniture, or the house no longer being “show-ready” will not affect the appraised value.

However, a very cluttered or messy home can make it difficult for the appraiser to see all areas and surfaces. So don’t stress about stuff being in boxes or strewn about, but do make sure main living areas as well as basements, crawl spaces, attics, etc. are accessible. 

Many homeowners tell me things like “I think you’ll be amazed” or “You’ve never seen a house like mine before”. But the truth is, I’ve usually seen a hundred or more homes just like yours.

So while your home may be special to you, and certainly unique in its own way, it’s very likely that I’ve either appraised or at the very least, walked through, a home that’s almost identical to yours.

Although I always love to see unique and interesting homes, the “uniqueness” of a home does not necessarily translate into a higher appraisal value.

As with any home, the value depends on a variety of factors, not just its uncommon features or appearance.

Fun fact: I did a quick calculation to get an estimate of how many homes I’ve personally visited in the Central New York area, within the five counties I cover.

This was the breakdown:

18+ years of home appraisals, with an average of 6-8 home visits per week: (more in the busy season)

= approximately 7,488 houses

That’s a lot of houses.

Many homeowners believe that any renovations or updates they make will result in a closely proportional increase in the home’s value. However, we do not and cannot simply add the cost of your renovations to the overall value of your home and call it a day.

Your home’s value is determined by recent market data and comparable sales, as these reflect what buyers are willing to pay for your home and all its renovations vs. how much you might have spent on them.

An appraiser WILL take note of all the little details, quality finishes, upgraded components, and special features within your home during the appraisal inspection.

However, the report itself will be a summary of key elements that contribute to your home’s overall value.

This includes its size, layout, room counts, locational data, and the overall condition and quality of the property, which includes considerations for updates and renovations.

The completed appraisal report is not meant to be an exhaustive list of every single element or feature in your home, but rather a credible evaluation of the property as a whole.

I once had a homeowner contact me for a very serious complaint after receiving his completed appraisal report. 

• The Complaint: I did not mention anywhere in the report that he had a BRAND NEW warming drawer built into his kitchen, and a Wolf gas stove that cost him $12,000. He felt the value would have been higher, had I noted these important details. 

• The Truth: I had made note of these details and even included them in the photos I provided to the lender, which is one of several other reasons I reported his home as being above average in quality. I just hadn’t dedicated a specific paragraph to his new appliances.

Needless to say, I felt the original value was already accurate.

This just goes to show that some homeowners can have unrealistic expectations when it comes to appraisals and their contents. 

I explained to him, as I have to others, that just because a certain feature is not specifically called out with a dollar amount next to it (which would be nearly impossible to do for every component), does not mean that it was not considered by the appraiser.

You’re in the process of purchasing a home and the closing date is looming. All looks fine until you find out the appraisal has come in low. 

What does this mean and how can it benefit you? 

This could present a good opportunity for you as a buyer. A low appraisal means that the property may not meet its desired sales price, and the market is indicating that you might be overpaying.

The potential benefit to you – the seller may be inclined to lower their price, knowing they may run into this situation again, even if they accept another offer and have a new appraisal done. 

This gives you an advantage in negotiations and could potentially save you thousands of dollars.

On the other hand, if you’re a seller and your appraisal comes in lower than expected, it might impact your ability to sell your home at your desired price.

This can happen, especially when home inventory is very limited and buyers are fighting over the few homes available. (This may sound familiar to anyone house hunting in 2023)

But remember, the purpose of the appraisal is to protect all parties in the transaction. It ensures that the property is sold at a fair market value and protects against overly inflated prices.

So, while a low appraisal may cause some stress in the short term, it can ultimately benefit all involved in the transaction by ensuring a fair price.

If you feel the appraisal is wrong, there are steps you can take to challenge the results.

One of the most common misconceptions is that appraisers are responsible for certain areas being undervalued, or for discrepancies in lending habits from one area to the next.

The truth is that appraisers are analyzing and reporting data on sales and trends that have already occurred, long before the appraiser came along with his or her opinion.

For example, if neighborhood “x” has a higher average home price than neighborhood “y”, it’s not because the appraisers all got together and decided that one area was worth more than another. It’s because buyers have already demonstrated what they are willing to pay for homes in that particular neighborhood.

The appraisal is simply a reflection of that.

So, while appraisers do play an important role in the home buying process, they are not responsible for setting market values for a given area.

Unfortunately, we still tend to get a significant share of the blame for discrepancies in neighborhood home prices or lending practices.

I hope we’ve uncovered a few secrets here that will help you to better understand the appraisal process.

Remember, an appraisal is an opinion of value based on the most current market data and expertise in evaluating a property and how all of its components work together to determine its value. 

Although it’s not an exact science, it’s an important step in the home buying process that should assist all parties in being well-informed and protected from making a bad financial decision.

Share your last appraisal experience in the comments!