Over the years, I’ve been asked a lot of questions about the appraisal process, but one that seems to come up more often is whether it makes sense to get an appraisal before putting a home on the market. It’s a reasonable question, and the answer is not always a simple yes or no. It really depends on the situation, and today I’d like to walk you through what a pre-listing appraisal is, how it works, and when it might be worth your while.
So what exactly is a pre-listing appraisal?
A pre-listing appraisal is an appraisal that is ordered by a seller or their agent before the home is listed for sale. It’s not done for a bank or a lender; it’s done for the benefit of the person selling the home. Just like any other residential appraisal, the appraiser will inspect the property, measure the home, take photos, research recent comparable sales, and arrive at an opinion of market value. The difference is that this appraisal can be used to accurately price your home based on what is currently happening in the market, using recent sales and current listings, which will be the competition for your property.
It’s worth pointing out that a pre-listing appraisal is not the same as a CMA, or Comparative Market Analysis. A CMA is a useful tool that most real estate agents use to come up with a suggested list price, and I’m not saying there’s anything wrong with them. But a CMA is put together by an agent, while an appraisal is done by a licensed or certified appraiser who follows specific guidelines when selecting comparable sales and making adjustments. The two can arrive at similar numbers, but they are not the same thing.
Why would a seller or agent want one?
The most obvious reason is pricing. Setting the right list price is one of the most important decisions you’ll make when selling a home. Price it too high, and buyers will pass on it. Price it too low, and you’re leaving money on the table. A pre-listing appraisal takes a lot of the guesswork out of that decision because it gives you an unbiased, data-driven opinion of what the home is worth in the current market.
I’ve been appraising for around 35 years, and I’ve seen what happens when a home is overpriced. It sits on the market longer than it should, buyers start to wonder what’s wrong with it, and eventually the seller has to cut the price anyway, often ending up below where they would have been if it had been priced correctly from the start. It doesn’t always happen that way, but it happens enough that it’s worth paying attention to.
A pre-listing appraisal can also be a big help when it comes time to negotiate. If a buyer comes in with a low offer, you can always show them the appraisal. And if the buyer’s lender later orders their own appraisal, there shouldn’t be many surprises because you’ve already done the homework.
For real estate agents, a pre-listing appraisal can be a useful tool when you’re working with a seller who is letting their emotions get in the way and may not be realistic about what it’s worth. It’s a lot easier to have that conversation when you have an appraiser’s independent opinion to back you up.
What a pre-listing appraisal is NOT
I want to make sure this is clear because I think it’s where some confusion comes in. A pre-listing appraisal is not the same as the appraisal the buyer’s lender will order after you go under contract. The lender’s appraiser is independent and is not required to reach the same value conclusion you have. Most of the time, the numbers will be close, especially if the pre-listing appraisal was done recently using the same pool of comparable sales. It is possible that they can come in differently because the real estate market is not precise. Most appraisals are within a close range of value
A pre-listing appraisal is also not a home inspection. An appraiser looks at the condition of the home as it relates to value, but we’re not going to be testing every outlet or pulling up flooring to look for moisture. If you have concerns about the physical condition of your home, a home inspection is a separate service.
How much does it cost, and is it worth it?
The cost of a pre-listing appraisal will vary depending on the size and complexity of the home, but most residential appraisals can run anywhere from $450 to $650, depending on the property itself and the location, which determines the scope of work. I know that might sound like an added expense you weren’t planning for, but think about it this way. If a pre-listing appraisal helps you avoid a price reduction of several thousand dollars, or keeps a deal from falling apart at the appraisal stage, it’s probably the best money you’ll spend in the whole selling process.
I’ve had sellers tell me after the fact that they wished they had gotten one before listing. In most of those cases, the home sat longer than expected, the price got reduced, and by the time it sold, they had spent more in carrying costs and stress than the appraisal would have ever cost them. That’s not always how it plays out, but it’s something worth keeping in mind when you’re weighing the cost.
When does it make the most sense?
Not every home sale needs a pre-listing appraisal, but there are certain situations where I think it’s a smart move. These include:
- Homes that are hard to price because there aren’t many similar sales in the area
- Properties that have been significantly updated or renovated
- Homes that are unique in some way — unusual floor plans, large acreage, mixed-use potential
- Sellers who are going the for-sale-by-owner (FSBO) route and don’t have an agent to help them price the home
- Estate or inherited properties, where the family may not have a realistic sense of the current market value
- Situations where the agent and seller are not on the same page about price
On the other hand, if you’re in a neighborhood with a lot of recent sales activity and your home is pretty typical for the area, an agent’s CMA may be all you need. The goal isn’t to add more to your to-do list; it’s to make sure you have the right information before you make one of the biggest financial decisions of your life.
Conclusion
If you’re thinking about selling and any of this sounds familiar, it might be worth talking to an appraiser before you list. A pre-listing appraisal may not get rid of all of the confusion in the selling process, but it can give you a much clearer picture of where you stand before you list your home for sale. If you have questions about the process, feel free to leave a comment below or reach out, and as always, thanks for reading.
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