How agents can sell their listing to the appraiser

Do Agents Have to Sell Twice?

How agents can sell their listing to the appraiserI hear agents say that they have to sell their listings twice. The first time it is to a potential buyer of the property and the second time it’s to the appraiser. Today I’m going to share with you how agents can sell their listing to the appraiser so that the sales transaction goes smoothly. You’ll get an “insiders” perspective since I am an appraiser about how to be more successful at convincing the appraiser that the home is worth what you are selling it for.

When I say convince, what I really mean is that you have the support for your list and contract price. I believe that if an agent has the market supported evidence then it will be a slam dunk. You see, appraisers must fully document and support their opinions of value so if an agent is familiar with what the appraiser must do then they too will have support and most likely their contracts will not fall apart due to the contract price being higher than the appraisal value.

Let’s take a look at how agents can sell their listings to the appraiser.

Six Ways Agents Can Sell Their Listing to the Appraiser

1) Get your square footage from a reliable source- I continue to harp on this issue because I see errors every day in the MLS. Most agents price a home based on square footage which is not always appropriate but we’ll save that discussion for another day, or you can read my previous post about it.

When it is appropriate you MUST have accurate square footage. If you do not then value errors are multiplied. If youIs MLS Square Foot Information Important have an error in the comps square footage then its sale price per square foot is incorrect. If you then take this figure and multiply it by the incorrect square footage of your listing then your pricing error has just gotten worse. See my point?

Agents must keep in mind that if their listing has a square footage error this will carry through to other listings when agents use your sale as a comp. The statistics provided by MLS providers all over the country will be flawed when incorrect square footage information is used.

The bottom line is that agents can show their due diligence to the appraiser by using reliable square footage information in their listing. If the appraiser sees that the square footage information has come from a highly reliable source then they have more confidence in the agents pricing of the property.

2) Complete a CMA- If you did not do a CMA how did you price the property? Is there a logical way to price a property without a CMA?

You can sell your listing to the appraiser by showing them that you priced your listing using a CMA. Providing an information packet to the appraiser that includes your CMA goes a long way in selling the listing because it shows them that you did your homework to price the property.

The CMA provides market support for the listing price. Appraisers must also provide market support for their value conclusions and we have to illustrate this in the appraisal report.

By showing the appraiser that your value is backed up by market evidence you are speaking their language.

3) Choose the best comps- Using the most appropriate comps goes hand in hand with the CMA. There is a difference between sales and comps and choosing the later is not always easy.

I’ve written in the past about how a real estate agent can choose the best sales comparables. There are specific criteria that appraisers and agents should look for.

If an agent knows these criteria, which is the ones the appraiser uses, then their list price and eventual contract price should be close to what the appraiser would arrive at when doing the appraisal for the sale. This will reduce the chances of there being a gap between the contract price and appraisal.

Providing the appraiser with the sales comparable used within the information packet you give to them can help them understand how you came up with your value. Of course, the appraiser will look over them and see if they are appropriate to use in the report.

4) Be realistic about the market- Sometimes it’s easy to get caught up in the moment when you keep seeingreal estate market statistics headlines about how much values are increasing. When sellers see this they can become unrealistic and put pressure on agents to price higher than the market can support.

Explaining to owners about how real estate is location specific can help them understand that just because prices are increasing in other areas that does not mean this is happening in their neighborhood.

The data you provide the appraiser to help you sell the listing is also the data that can be used to explain to the seller why you are pricing their home at the amount you are. If you are not realistic about the market the listing may end up not selling or if it does it may stay on the market for an extended period of time.

While this is not the end of the world you may have to rethink your strategy about selling a stale listing. This is where being an expert in your market pays off.

5) Document support for the price- When selling your listing to a potential buyer or the appraiser it helps to have supporting evidence in addition to the CMA. This can be in the form of a list of recent upgrades made to the house.

While the cost of upgrades or renovations is by no means an indication of the increase in value they may give it can help the appraiser make condition and effective age adjustments in the appraisal. Appraisers compare the subject property with the comps and make appropriate adjustments where necessary if the market supports it.

Having a list of the various features of the home can also “sell” the contract price if these features are demanded by buyers and they will pay for them. Providing this additional information to the appraiser can help them understand how you arrived at your price and also help them determine if it is market supported.

6) Provide proof of market demand- The last tip I have for selling your listing to the appraiser is to provide proof that buyers are willing to pay the price by including back up contracts. Back up contracts are better than offers because there is proof of it and it’s not just a verbal offer.

Appraisers do take these into consideration, especially if we have proof of it and we can document it in the report. Just in case you’re wondering agents, you are not the only one that has to sell something. Appraisers have to sell their appraisal report to the lender and underwriter as well. We do this by providing a well documented and market supported appraisal that explains how we came up with our opinion of value.

Additional Questions?

If you have any additional questions about what you can do to help sell your listing to the appraiser leave a comment below.

If you liked this post subscribe by email (or RSS feed). Thanks for visiting.

Comments

  1. Good article Tom. You saved the best point for last. Back-up contracts and bidding war info is critical to us in many “frothy” markets.

    • Thanks, Michael. I have found that agents are not aware that they are allowed (or should) give this information but it certainly paints a more complete picture of what is going on with the market.

  2. Nice job Tom. I’m glad you clarified too on what you mean by selling. The thing for agents to remember is appraisers live in a world of data. Thus the best thing agents can help provide appraisers is any data or information that helps paint a context for how the subject property was perceived in the market. It’s nice when agents tell me a property is desirable, that there’s a pool-sized yard, and it’s a “hot” market, but that type of information really doesn’t actually give me any specific data to consider either. Thus I recommend sharing specific information about the property and marketing of the property to help the appraiser better understand how the subject might fit into the market (without trying to pressure the appraiser to come in at a certain value of course). It goes without saying that being honest is paramount too. If I hear there were 7 offers, I just might ask to see the contracts. 🙂

    • Thanks, Ryan. Yes, I agree, the statements must be quantifiable. Just making a statement about the market really does not help us out but providing backup contracts or sales data that shows support for their list price goes a long way.

  3. Great points Tom! As a fellow appraiser, I completely agree with everything you stated. Any market data support provided is helpful. While I never ask an agent for sales, I always accept all of the information that they provide to me and I always take a serious look at it. There have been times when I missed a good sale because in the MLS the GLA was blank or it was geocoded incorrectly and didn’t show up in my search. Real estate agents may know of these sales and provide them to us, which can be incredibly helpful. Thanks for a great post as always! By the way, I love the visuals you’ve been using.

    • Thanks, Jamie. I too had a situation where a sale did not show up because it was not tagged correctly for the market area. I think it is always a good idea to consider all available information and determine if it is appropriate to use.

Trackbacks

  1. […] How Agents Can Sell Their Listing To The Appraiser – Birmingham Appraisal Blog […]

  2. […] How Agents Can Sell Their Listing To The Appraiser – Birmingham Appraisal Blog […]

Speak Your Mind

*

Sign up and get valuable content!

  • Get local real estate market data
  • Learn valuable information from a seasoned appraiser
  • Find out what adds value to your home

I respect your privacy. Your information stays with me.