1. It costs too much money- Really? If you think about the fact that by pricing the home correctly you could cut the marketing time down and reduce marketing costs, this becomes a no brainer. In addition, the modest cost would probably not exceed future price reductions that you may need because it was priced too high to begin with.
2. I want to test the market first- Some people think that they can “test” the market to see if the their estimate of value will be accepted but this could lead to longer marketing time and multiple price reductions.
3. My Realtor can come up with a list price- This is true, and there are many good Realtors that know the market, however when your home is in a an area where sales activity has been minimal, or the agent is not familiar with the market, then an appraisal can give you a more educated estimate of value that reflects current market activity.
4. I can use the tax assessed value to price my home- Assessment values set by the county that you live in are not arrived at with the same methods as an independent appraiser would use. They are done on a larger scale and do not take into consideration special features of your home. They may even be excluding newly finished areas such as basements.
5. I can give potential buyers the square footage that the county has- Buyers like to know how big a house is so that they can determine if their furniture will fit in the house. An appraisal will give accurate square footage (and a floor plans sketch) so that you can let them know exactly how big the house is.
6. I can price it for the same amount that my neighbor did who sold his home recently- I ran into a homeowner who tried this recently. What he didn’t know was that the neighbor told him the wrong price. His home actually sold for less than what he said. My client tried for months but could not sell his home because it was overpriced. He got an appraisal and we found out the home sold for a lesser amount. After my client readjusted his price, the home sold quickly.
7. I never had to do this before, why do I need to now?- We live in an unprecedented time. Who ever thought that real estate values would go down? There are more foreclosures on the market now that WILL be competing with your home. They are in better shape than they use to be and are being considered by potential buyers. An appraisal will consider both normal and foreclosures to arrive at a more accurate value estimate. If these are not considered then you could over price your home which will result in a longer marketing time and more future price reductions.
8. I know how much money I’ve put into my house, I can go by that- Cost has never equated to market value, and even more so in today’s market. While construction and renovation costs have increased, property values in many areas have decreased. Because of this you cannot assume that all of the money you invest in your home will be returned when you go to sell. Again, a pre-listing appraisal will give you a realistic estimate of what you can expect to get for your home in today’s market considering its current condition.
9. I can list it for an amount similar to what my insurance company has it insured for- For reasons similar to #8, insurance value does not equal market value. The insurance company insures your home for an amount that would be required to rebuild the home. This does not factor in depreciation and general market forces.
10. I’ll use the value that the appraiser came up with last year when I refinanced- With today’s ever changing market even an appraisal done last year can be invalid. Markets are changing daily and if you use an appraisal from last year the value may be inflated in this years market, which can result in longer days on market, price reductions and other items I’ve already mentioned. If it is in an area that is starting to rebound then the value could be too low. An appraisal done today is more accurate than a year ago.
As you can see, there are many reason not to get a pre-listing appraisal, but they all lead to the same results: incorrectly pricing your home for sale so that it takes longer, costs more, and results in unnecessary price reductions. By making a modest investment upfront you can increase your chances of a successful sale experience.
If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.
I’m trying to understand what’s the difference between a pre-listing appraisal and a regular appraisal? Can somebody help me with this?
Sylvia, a pre-listing appraisal is simply an appraisal done before putting the house on the market. The benefits of getting a pre-listing appraisal include having the correct square footage and using the appraisal value to determine a list price for the home that is based on recent sales and current active listings that will be competing with your home. I have found that many MLS listings have the incorrect living area which the list price was based on. The problem with this is that if the list price was based on square footage that is actually more than the house has it will be overpriced and stay on the market for too long. If the actual square footage is more than the listing shows the list price can be too low and you will leave money on the table. Hope this was helpful.
Just stumbled across this. I think in markets where million dollar houses are selling left and right, the price is warranted, but in markets where the average home price is $100,000 then maybe not so much.
Thanks for your thoughts Austin. I still feel that even with the lower priced homes a pre-listing appraisal can be helpful because there is more competition in those price ranges and having it accurately priced can help you sell it quicker.
Tom, I like the one about using their tax value to set the price. How many times have we heard homeowners say that their tax assessed value is too high, but then refer to it when selling. Crazy times we’re in.
It is interesting times Michael! How are your tax assessments comparing to selling prices/market value in your area?
Depending on the area, many are too high and a few are close to being on. The big question is what’s going to happen when values start to increase and then everyones taxes go up. OUCH!
Our area is similar.
Great job!
Thanks Brian.
Well said, Tom.
Thank Ryan.
Nice list. Tom. All ten items are right on point.
Thanks Wendell.