What hurts home appraisal for refinance? Things you should consider

An appraiser will look beyond the normal signs of life in your home to determine its value.

You probably had your home appraised when you first bought it, but if you’re looking to refinance, you’ll likely have to go through the process again. This time, you’ve lived in your home for a while and it’s showing basic wear and tear and other signs of life. You didn’t have to worry about this before, but now you’re asking: can a messy home affect an appraisal?

The short answer is “No, a messy home should not affect the outcome of an appraisal.” However, it’s good to be aware that there are circumstances in which the state of your home can negatively affect its value. Let’s go over what appraisals entail and what factors can influence them.

What is an appraisal?

First things first: an appraisal is an unbiased estimate of your property's fair market value. It's conducted by a licensed professional and requires a thorough inspection of your home and its surrounding area. Appraisals can take anywhere from a few minutes to several hours to complete.

To determine your home’s value, an appraiser will consider everything from its structural integrity to its age, and the price of similar homes in the neighborhood. That’s why it’s necessary to get a new appraisal before you refinance. In the time since you purchased, any number of events could have changed the value of your home—including upgrades, damage, and changes to the housing market.

Why do I need a home appraisal for refinance?

The purpose of an appraisal is to reassure your mortgage lender that they are not lending more than what your home is worth. If you were able to borrow a surplus, your lender would be at risk of losing money if you defaulted and they had to foreclose the property.

The home appraisal process for refinancing a mortgage is similar to if you’re buying. In essence, you are switching out your old home loan for a new one, and your lender needs to know the value of your home to lend the right amount.

What do appraisers look for in their reporting?

An appraiser will thoroughly evaluate the quality of your home’s interior, including:

• Square footage
• Layout
• Amenities
• Structure
• Potential hazards

They will count the number of bedrooms and bathrooms, and note the size of the kitchen and living room. They will check that everything is structurally sound and that your plumbing and heating systems are in working order. They will pay attention to surfaces, appliances, handrails, flooring, fire escapes, and windows.

The exterior quality of your home will also affect its appraisal, including:

• Roof
• Foundation
• Siding
• Guttering
• Overall structure

Your appraiser will inquire about the property’s age and its construction quality. They will also research the prices of nearby homes, available parking, local attractions, and proximity to schools and busy highways. You can renovate some aspects of your home to improve your appraisal, but many will be outside your control.

Do appraisers follow a set of standards?

Appraisers in most states use the Fannie Mae Uniform Residential Appraisal Report—a form that was created to ensure standardized reporting across the industry. Among other conditions, Fannie Mae requires all appraisers to have experience reviewing similar properties in the same geographic area. This way, appraisers can more accurately determine your home’s value compared to surrounding properties in the neighborhood.

In addition to the Fannie Mae guidelines, appraisers must obtain state licenses, which may require additional certifications depending on their locations.

Does cleanliness affect a home appraisal? What hurts a home appraisal?

Appraisers are trained to overlook clutter. Stray clothes, scattered toys, unwashed dishes, unmade beds, disorganized closets, and other items that suggest you actually live in your house should not affect an appraisal if they don’t affect its structural integrity.

With that said, some signs of neglect will influence a home’s value—including mold on the walls, peeling paint, and pungent odors from dampness or cigarette smoke. Extreme clutter may also make it difficult for an appraiser to assess the value of your house. If excessive mess prevents them from entering rooms or viewing everything they need to, they may deduct points.

How to prepare for your appraisal

If you are ready to have your home appraised, you should address any significant issues that may affect your home’s value—such as damaged flooring, outdated appliances, and broken windows. A messy home should not affect an appraisal, but signs of neglect may influence how much lenders are willing to let you borrow.