People are different. Some like to get their hands dirty in projects, while others may want to hire someone to do it for them. The abundance of DIY shows on T.V. have given people the knowledge and motivation to do it themselves, learn something new, and save some money. There are people who have built additions on to their homes, made repairs on their automobiles, and even manage their own investing in the stock market. Selling your home is no exception, and with the technology and tools available today it can be done successfully, as there are many people who attest to it. There is however one critical mistake that would even cause the robot from the 1960’s sci-fi show “Lost In Space” to short circuit, and that is when FSBO (For Sale By Owner) sellers fail to get an appraisal.
In a quest to save money you may choose not to get an appraisal, however by doing so you run the risk of losing your objectivity. If you allow this to happen you will let your emotions get involved when you set a list price for your home and this can result in listing it too high. I rarely see people ask too little for their home, however it can happen. If you decide to forgo using a real estate agent, then you must at least get the unbiased opinion of another professional: the appraiser. Appraisers are trained to look at your property with impartiality and form an opinion of value based on what other similar homes are selling for. They will also look at what is available for sale and what properties will be competing with yours. Your home must be priced to the market or two things can happen. If you list it too high then it will sit on the market for an extended period of time and you will eventually have to drop the price. When a home is on the market for a long time potential buyers may think something is wrong with it which can prevent them from wanting to look at it. If you list it too low then it will sell fast, however you may leave money on the table, not a very desirable outcome.
Most homeowners mean well and attempt to list their home based on what they believe to be good price, however it’s not always so straight forward. 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 the owner was basing his price on 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.
Don’t let your lack of knowledge of the market get in the way of selling your home. Many people are confused about what types of improvements add value. This is a common problem with homeowners who have invested a lot of money in improvements and renovations. There are many websites that will give you an estimate of how much of a return on your investment you could expect on some common home projects and it’s a good idea to check this out to just so you are informed. Just because you spend $50,000 on home improvements does not mean your home’s value will increase by that amount, it could be more, less, or the same. An appraisal will provide you with an opinion of value that includes all of the improvements you have made, and reflect the markets reaction to them.
Just because you are selling your home yourself does not mean you have to do a sloppy job. People come up with all kinds of reasons not to get an appraisal, however the bottom line is that if you’re going to do it yourself you might as well do it right. An appraisal can provide you will all kinds of useful information for potential buyers. For one it will give them the peace of mind knowing that the likelihood of the deal falling through, because it does not appraise for the contract price when they try to get a mortgage, is decreased. In addition, information from the appraisal can be used in the FSBO website description for your home, which includes accurate square footage calculations and a floor plan sketch with room locations. The information in the report can help not only in finding out the value you should ask but also by providing useful information for all potential buyers.
In a subsequent blog post I will compare several different FSBO websites to help you decide which one is the best fit for you. I would be interested in hearing from you if you have used an online service to sell your home, whether it be positive or negative. Did you get an appraisal? Why or why not?