Are you a homeowner? Lucky you: you’ve got equity! Equity is the amount of the home’s value that you own, equal to the home’s appraised value minus any outstanding debts.
If you want to use your equity to pay off debt, purchase a new home, or fund a business, the first step is getting a home appraisal. The appraisal, an independent assessment of your house’s worth, describes what’s valuable about your home and compares it to similar properties in the neighborhood. Getting appraised is necessary when applying for a home equity loan or a home equity loan alternative.
To get a favorable appraisal report, use this home appraisal checklist to ensure you’re getting the maximum value for that white picket fence.
1. Learn the Difference Between an Inspection and an Appraisal
A home inspection and a home appraisal are not the same things in real estate, but they are often confused because a professional visits a home and inspects it in both scenarios.
The goals of the two processes differ:
- Home inspection – Gives a prospective buyer detailed information about the home’s condition (including its structure and construction), a list of things that may need to be fixed, and an estimate of the home’s longevity
- Home appraisal – Estimates a property’s home value for lenders and determines a fair price that buyers should be willing to pay
Know that a home inspection and a home appraisal are different and that one cannot replace the other. A home inspector reports your home’s condition. A home appraiser determines its market value with a home appraisal checklist based on the prices of comparable homes.
If you’re applying for a cash-out refinance, a home equity loan, or another way to leverage your equity, you’ll need an appraisal.
If you’re selling your home to non-cash home buyers, you’ll need an inspection and an appraisal. If you’re interested in applying for a mortgage or home equity loan, the home appraiser sends the appraisal report to the lender.
2. Be Aware of Appraisal Costs and Timing
Home appraisal prices average $340 in the United States, though it can vary from about $200 to $600. The reason for the range can be anything from the size of the property to the appraisal process itself, to its location. The borrower is typically responsible for this cost, so if you’re applying for a loan, you’ll need to cover this fee yourself.
If you’re selling your home, the buyer and their bank will schedule the appraisal. This should occur near the closing date since marketing conditions can change over a handful of months.
When it’s officially appraisal day, clear your schedule: the process can take anywhere from 20 minutes to a few hours. The appraiser will submit the written appraisal to the lender about three to five days afterward.
3. Learn What Affects Your Appraisal
Your appraiser will use a designated form, almost like a home appraisal checklist, written and approved by a lender when she performs an inspection. Though the appraiser won’t check whether the outlets work, home appraisers often note other general features in their performance review.
Common home appraisal value factors include:
- Quality and condition of the roof, foundation, landscaping, plumbing, and lighting
- Number of bedrooms, bathrooms, and fireplaces
- Size of the home and property lot
- Upgrades and improvements, such as types of flooring, countertops, and appliances
4. Follow the $500 Rule
A home’s worth is typically valued in increments of $500, such as $130,000, $130,500, and so on, meaning that minor home improvements can mean major big bucks. Time to get out that toolbox!
Ensure your home appraisal checklist includes:
- Repairing any glaring problems, like damaged drywall
- Repainting rooms if the color has faded, especially the home’s exterior
- Investing in landscaping services or enhancing the curb appeal yourself
- Replacing old carpet or other floorings
5. Repair “Red Flag” Issues
Now that your squeaky door and scuffed wall are fixed, it’s time to turn a critical eye on potential red flags. Did you know that your home’s value may be affected by things that might lead to problems, even if they aren’t full-blown issues yet?
When an appraiser conducts home appraisals, an appraiser may list conditions that need to be inspected by an expert, including things like:
- A leaky or damaged roof
- Plumbing or electrical fixtures that aren’t up to code
- Insect infestations, such as termites
- Unregulated temperatures, like dampness
In short, any damage can potentially bring down your home’s appraised value and will lessen the chances of selling to a potential buyer.
6. Scrub, Mop, and Sweep
You’ve already tackled your time-consuming repairs. Another step to prepping your house is something the whole family can participate in: a nice, deep clean! A well-maintained home appears more valuable than one that isn’t.
In each room:
- Declutter surface areas – Trash it, organize it, or sell it—there’s no wrong way to get rid of stuff. Tidy areas make for easier cleaning once you get down to business with a vacuum or rag.
- Start high, go low – Begin with the ceiling, then move to the ceiling trim, ceiling light fixtures (including bulbs), walls, the rest of the trim, and finally, your baseboards.
- Add some sparkle to your windows – Dust the sills, then spray and squeegee the smudges away.
- Give your vacuum a workout: If something isn’t nailed down, move it and clean under it. Beds, couches, bathroom rugs, chairs: everything gets this treatment.
7. Improve Your Appraiser’s Experience
Once you’ve scratched off your appraisal checklist items, there are a few other things you can do to ensure your appraiser’s experience is a smooth one.
During the appraisal:
- Make sure the appraiser can access all rooms and property features
- Allow the appraiser to work undisturbed
- Provide a list of any recent upgrades you’ve made with estimated prices and dates
- Provide copies of previous appraisals
These are just the tips for a general home appraisal checklist. If you are thinking of a home appraisal for refinance, there are other additional factors you may have to be mindful of.
If you are applying for loans from government agencies, know that the appraisal process is stricter. An example is the FHA appraisal because they base their standards set by the US Department of Housing and Urban Development. If you or your spouse are veterans, a VA loan also requires a VA appraiser to assess your home value and determine if it passes their minimum property requirement.
Skip the Appraisal and Access Your Equity with a Sale-Leaseback Program
Even once you’ve scoured the floorboards and paid the appraisal fee, there’s no guarantee that your appraiser’s report will value your house at the number you need to refinance, take out a loan, or sell your house to a homebuyer with financing. Even if your home’s condition is excellent, it’s still subject to their standards.
But other options are available.
A sale-leaseback program can help you unlock your equity no matter your goal ( without involving an inspector or appraiser). Through a sale-leaseback option, convert your home equity to cash by selling your home and leasing it back for as long as you want.
Follow these tips off our home appraisal checklist to help you get a favorable appraisal score. Are you a homeowner? Lucky you: you’ve got equity! Equity is the amount of the home’s value that you own, equal to the home’s appraised value minus any outstanding debts. If you are still unsure of options to securing this equity after reading this article, consult a financial advisor to discuss your options.
- U.S. Dept. of Housing and Urban Development. For Your Protection, Get a Home Inspection. https://www.hud.gov/sites/documents/92564-CN.PDF
- U.S. News & World Report. Home Appraisals: What You Need to Know. https://loans.usnews.com/articles/what-you-need-to-know-about-home-appraisals
- American Financing. What to Expect from a Home Appraisal: Your Checklist for Success. https://www.americanfinancing.net/mortgage-basics/home-appraisal-checklist
- Truliant. Five Ways to Prepare for a Home Appraisal. https://www.truliantfcu.org/borrow/mortgages/five-ways-to-prepare-for-a-home-appraisal
- Investopedia. Home Appraisal Checklist. https://www.investopedia.com/home-appraisal-checklist-5085295
- Better Homes & Gardens. This Room-by-Room Guide Makes Deep Cleaning Your House So Much Easier. https://www.bhg.com/homekeeping/house-cleaning/tips/how-to-deep-clean-your-house/
- Chase. The Complete FHA Appraisal Requirements Checklist.
- Veterans United. Understanding the VA’s Minimum Property Requirements.