What problems or red flags negatively affect a home appraisal?

Appraisers weigh the overall condition of the home, including the foundation and roof, the quality of renovations, and neighborhood characteristics such as the view and nearby noise. Visible defects, deferred maintenance, and structural issues lower the value estimate against comparable sales. Location factors that cannot be changed, like a noisy highway or an obstructed view, also drag on value.

Appraisers flag conditions that affect safety or marketability: hazards, soil contamination or septic problems, drainage issues, defective paint in homes built before 1978, defective roofs, foundation and crawl-space problems (access under 18 inches is a deficiency), and failing mechanical or heating systems. For FHA appraisals, required repairs are limited to those necessary to preserve the property's continued marketability and protect the health and safety of occupants. Cosmetic items such as worn-but-adequate finishes, dead grass, and mismatched tiles do not require repair.

Appraisers reviewing a home for FHA financing look at safety, soundness, and security, and common red flags include peeling paint, broken windows and doors, drainage problems, infestation, and damaged major systems such as heating, electrical, or plumbing. An FHA appraisal also flags a roof with less than two years of remaining life and an undamaged but inadequately drained foundation, along with unsafe road access or missing potable water and sewage service.

Appraisers examine conditions affecting a property's safety, soundness, and value. Common red flags include active roof leaks, exposed wiring, missing handrails, plumbing leaks or mold, non-working utilities, structural damage, peeling paint in pre-1978 homes, pest infestation, poor drainage, and unpermitted additions affecting safety or marketability. On Federal Housing Administration (FHA) appraisals, items violating the Department of Housing and Urban Development's (HUD) Minimum Property Standards become required repairs.

Appraisers weigh the home's site and setting (neighborhood characteristics, zoning, lot size, utilities) and its physical condition (square footage, bedroom and bath count, foundation, basement, building materials). Problems in these areas, such as foundation defects or substandard materials, can lower the appraised value. Lenders also require an independent, licensed appraiser with no connection to the buyer, seller, or lender.

Common red flags include health and safety hazards, soil contamination, drainage that slopes toward the foundation, termite damage in ground-level or wood-touching-ground structures, roof defects, and defective paint in homes built before 1978. FHA rules also cover broken windows, steps without handrails, inadequate attic or crawl space ventilation, and well or septic setbacks that fall short of the required distances. An encroachment is more serious: it generally makes a property ineligible for FHA insurance unless a perpetual encroachment easement is filed.

Appraisers commonly flag peeling interior or exterior paint, broken windows and doors, damaged heating, electrical, or plumbing systems, roof coverings with less than two years of remaining life, pest infestations such as termites, and poor yard grading or drainage. Safety hazards and environmental concerns also weigh on value. On FHA appraisals, these items are judged against HUD's standards for safety, soundness, and security, and required repairs can reduce value or delay closing.