People may think that I believe this because I am an appraiser, and the more people that get pre-listing appraisals can only benefit me, but it truly makes sense. I have seen it happen numerous times. A house is selling and everything has been done: contract, title, home inspection, etc. and the last thing is the appraisal. Unfortunately sometimes the value just isn’t there, and the deal falls through.
This can be avoided with a pre-listing appraisal which is an appraisal to determine the market value of the home for selling purposes. I see this mostly in FSBO situations, however in today’s volatile real estate market, it only makes sense for MLS/agent listed homes too. In the FSBO situation homeowners attempt to list their home based on what they believe to be accurate sales information. I once did an appraisal for a homeowner who based his asking price on what his neighbor told him he sold his house for. Unfortunately the neighborhood inflated the price a little. My client listed his home too high and the home just would not sell. I did an appraisal and found out the home sold for less, and since I used that home as a comparable, the appraised value was lower than what my client had his home listed for. The good part was that the value I arrived at was based on what other homes actually sold for. This gave my client a value that was based on the market and it compared well with other homes. Two weeks later my client had a contract.
Usually people can get the sales price and date of a sale from public records, however the particulars of the transaction (financing, motivations of buyers/sellers, and physical characteristics of the home) may be harder to track down. These things do affect what a home sells for. Sometimes a home may sell low because of a divorce situation (I would not use this sale) or sometimes it may sell high because the seller paid more than typical closing costs. Some homes have finished basements which will cause it to sell higher. These things are analyzed by appraisers to arrive at a market value for the home in question. An appraiser’s estimate of value is unbiased and based on market data. If a homeowner tries to price their home they may list it high because they are emotionally tied to the home.
Real estate agents do provide a more market derived estimate of value for the home than the homeowner can, however even they do not go into as much detail as an appraiser does. In addition, in today’s market an agent may recommend a price lower (because of depreciation in some areas) than what the homeowner may have expected. A professional appraisal can provide support to what the agent came up with if the homeowner is unhappy.
By getting a professional appraisal before listing the home, and basing the price on the appraisal, there will not be any surprises when it comes down to the last stages of closing the deal. This makes everybody happy…and only makes sense.
Tom Horn
;)
;)
Tom: I do agree that a good deal of pre-listings should have a pre-listing appraisal done--especially if the clients feel that their home is worth far more than it needs to be listed. It also lets your fellow agents know that you've priced the home properly!