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What Will Fail a Home Appraisal? Top Issues That Can Impact Your Home’s Value

Updated: Jan 21

When you're preparing to sell your home, refinance, or secure a loan, the appraisal is a critical step. As real estate appraisers serving North and South Carolina, 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  • Outdated mechanical systems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.


Understanding the Appraisal Process

The appraisal process can seem daunting, but it doesn’t have to be. We’re here to guide you through each step. Our experienced team will provide insights into what to expect and how to prepare effectively.


Common Misconceptions About Appraisals

Many people believe that appraisals are just a formality. However, they play a crucial role in determining the value of your property. Understanding common misconceptions can help you navigate the process more smoothly.


The Importance of Accurate Valuations

Accurate valuations are essential, especially in sensitive situations like divorce or estate planning. Our independent appraisals provide the objective insights needed to make informed decisions.


Building Trust Through Transparency

At Efird Appraisals, we pride ourselves on our transparency. We believe that open communication fosters trust. Our clients appreciate our straightforward approach, ensuring they feel informed and confident throughout the appraisal process.


Why Choose Us?

With over 40 years of experience, we have established ourselves as a trusted resource in the community. Our local knowledge and commitment to excellence set us apart. We understand the unique challenges and opportunities in the North and South Carolina markets.


📞 704.331.0400

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