There are plenty of myths regarding appraisals and what we look for when inspecting a house. I've broken the inspection down into five very broad categories to help homeowners and other users understand the process.
1. Design and Quality - Does the house fit in with other houses on the street and neighborhood? Is it a similar quality? In my area ranch homes dominate the market, but two story homes are present and accepted by many buyers. Are there enough bathrooms? A five bedroom house with one bath may sell for a lower price than a two or three bath house.
Quality refers to the quality of construction. Is the house a basic house with few features and inexpensive materials? Does it have higher quality windows, doors, tile roofing, many offsets, 10' ceilings?
2. Condition is the next item I address. This ties into the age of the property, and addresses the depreciation present. I look at the flooring, cabinetry, counter tops, bath fixtures, and other systems to see if they have been well maintained, or updated. Updates and renovations can have a significant impact on the sale price of houses, especially older houses.
3. Amenities include items such as a fireplace, swimming pool, spa, extra rooms, decks, sheds or barns, fencing etc. Again these items may have a significant impact on values.
4. Living Area is the total area used for living space. Living area is heated and cooled in most areas of the country. Fannie Mae does not generally consider a basement as living area even though it may be finished and heated/cooled. However, a finished basement may contribute to the value of the house and likely will be considered in an appraisal. For single family housing the living area is determined by measuring the exterior of the house, excluding porches and garages. Condominium living area is measured from the inside of the unit.
5. Safety and habitability refers to any hazardous or unsafe conditions or features in the house and surrounding neighborhood. Exposed electrical wiring, mold and mildew, pool fencing or screening, missing railings, broken windows all can be considered a hazardous condition and may have to be repaired before closing.
These are just a few of the items we look for when appraising a house. There are too many items to list individually. By making sure your house is safe and accessible the appraisal process will be quick and easy!