What Will Fail a Home Appraisal? Top Issues That Can Impact Your Home’s Value
- lross035
- 22 hours ago
- 3 min read
When you're preparing to sell your home, refinance, or secure a loan, the appraisal is a critical step. As real estate appraisers serving we’re often asked:
"What could cause a home appraisal to fail?"
The truth is—appraisals don't technically fail. However, certain issues can lower your home's value, delay financing, or require repairs before a loan can close. Below, we break down the most common red flags that can negatively affect an appraisal.
✅ Safety, Structural, & Habitability Issues
Lenders want to ensure the property is safe, sound, and sanitary. Major problems in these areas often require repairs before closing:
Roof leaks or major roof damage
Foundation cracks or structural settlement
Electrical hazards or exposed wiring
Significant plumbing issues or water damage
HVAC systems not functioning properly
Mold, rot, or pest infestations
Unsafe staircases, porches, or railings
If it affects the safety or condition of the home, it affects value.
✅ FHA, VA, & USDA-Specific Requirements
For government-backed loans, appraisers must check additional criteria, such as:
Peeling paint in homes built before 1978
Missing handrails or broken steps
No functional heat source
Water intrusion or standing water
Trip hazards or broken sidewalks
Inoperable windows or doors
Lack of GFCI outlets in wet areas
If you're going FHA/VA/USDA, a pre-appraisal check for safety issues can help avoid delays.
✅ Significant Deferred Maintenance
Even if issues aren't “major,” neglect adds up and affects marketability and value:
Worn flooring or damaged walls
Deteriorated exterior siding
Outdated mechanical systems
Broken appliances
Overgrown landscaping
Poor overall property condition
Buyers—and appraisers—consider how much it will cost to bring a home up to market standards.
✅ Illegal or Unpermitted Additions
If a space isn't built to code or isn’t permitted, it may not be counted as living area, including:
Garage conversions
Finished basements without proper egress
Rooms added without permits
Additions without permanent heat
This can drastically affect valuation, even if the space looks good.
✅ Inaccurate Square Footage & Bedroom Count
Bedrooms must meet guidelines (especially in NC/SC). To be considered a bedroom, typically you need:
A properly sized window for egress
A closet (in many markets)
Heating/cooling
Proper ceiling height & finished flooring
Similarly, square footage must be:
Heated & finished
Accessible
Permitted (in most cases)
Basements rarely count as above-grade living area in NC and SC.
✅ Market & Neighborhood Factors
Some value issues are outside the home's walls:
Declining neighborhood sales
Oversupply of comparable homes
Nearby external influences (power lines, busy roads, commercial sites)
Appraisal gaps in rapidly shifting markets
Appraisers rely on recent comparable sales and local market trends—not list prices or online estimates.
How to Avoid Issues Before Your Appraisal
Here’s how homeowners can prepare:
✔️ Fix visible maintenance issues
✔️ Ensure utilities are on
✔️ Provide a list of recent upgrades
✔️ Clear clutter & ensure access to attic, crawl space, electrical panel, and HVAC
✔️ Have permits available for renovations and additions
Think of it as getting appraisal-ready, just like you would for showings.
👇 Want a guide for your next appraisal?
Download our FREE Appraisal Quick Guide here.This helpful resource breaks down the appraisal process and gives you key tips to ensure a smooth experience.
Professional, Objective, and Local Expertise
At Efird Appraisals, we evaluate properties across North Carolina and South Carolina with fairness, accuracy, and market expertise. Our goal is to help homeowners, agents, attorneys, and lenders understand true market value — based on data, condition, and current market trends.
📞 704.331.0400
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