Is a Pre-listing Appraisal Still a Good Idea?

Should I Get a Pre-listing Appraisal?

Pre-listing Appraisal Truths and MisconceptionsI recently ran across an article where a homeowner was asking a real estate agent whether they should get a pre-listing appraisal on their home prior to selling. The answer the agent gave interested me because it contained numerous errors and misunderstandings about appraising and appraisals.

I have been blogging about real estate appraisals for around eight years now and from the very start my main goal has been to educate the public on the how and why of appraising. This article is exactly the reason why I continue to educate the public because apparently there is still confusion with the appraisal process.

If you’d like to read the article you can do so here. I thought I would point out each of the errors and then give my take on the point. If you have any additional questions about what was discussed in the article or you have a question of your own feel free to leave a message below and I’ll be glad to answer it for you.

Pre-listing Appraisal Misconceptions

Can a pre-listing appraisal come back to bite you if you get a contract higher than the appraisal?– A pre-listing appraisal is typically done for the seller of a property and/or their real estate agent. Whenever this is the case the appraisal is only seen by the appraiser and their client.

Because of appraiser-client confidentiality, there is no way that the appraisal could reappear and be an issue when the buyer attempts to get a loan for a higher price than what it appraised at. What could be an issue, however, is that if the home was listed higher than the pre-listing appraisal, it may not appraise for the contract amount if no newer and similar sales have occurred that support the higher price.

An appraisal is a “snapshot” of value in time. The appraiser’s opinion of value is for the effective date of the appraisal. If the market is stable then not much may change between the time the appraisal was done and when it goes under contract.

If additional sales do occur then it may result in a higher or lower value than the pre-listing appraisal. One way to get additional perspective during the pre-listing appraisal is to utilize active listings and pending sales.

This can give us some insight into the direction the market is taking. These listing and pending comps will also most likely be the closed sales that the other appraiser uses during the mortgage appraisal.

What the author of the article may have been thinking of were FHA appraisals. Whenever an FHA appraisal is done the property is assigned a case number which stays with the property.

If an appraisal was done for an FHA sale and it comes in lower than contract then this could be an issue if that deal falls through but the seller continues to try and sell it for the higher amount, however, this is a totally different scenario than the one discussed in the article.

Does the appraiser use a contract to “verify” the price of the home?– A contract that is provided to the appraiser as part of an appraisal assignment IS NOT a point of value for the appraiser to shoot for. This practice is known as bracketing the sales price which is a no-no in appraising.

An appraiser’s job is to develop an opinion of value for a subject property based on market data. The appraiser chooses their comparables based on bracketing the physical characteristics of the property rather than the contract price. You can read more about bracketing in this past article I wrote.

Whenever you bracket the contract price of a home you will most likely be able to find sales, but they may not be true comps. These sales may not provide an accurate indication of the market value of the property. The most reliable way to find similar comps is to bracket the physical characteristics of the property, such as gross living area, bedroom and bath count, etc.

Appraisal vs. Opinion of value (CMA): which is better? This article seems to confuse an agents opinion of value, which is a CMA, and an appraisal. The two can be confusing, however, the main difference is that an appraisal is developed by an unbiased third party using market data to develop an opinion of value and a CMA is an estimated list price provided by a real estate agent. I covered CMA’s and pre-listing appraisals in this past article.

The author commented that an opinion of value was not an appraisal but in actuality it is. An agent could give their opinion of list price but it would not be an official appraisal such as an appraiser could provide.

The agent actually provides a suggested list price when they do a CMA, which is vastly different from an appraisal. A pre-listing appraisal will be completed using similar guidelines that a mortgage appraisal would use so there should be minimal differences between the guidelines used in each report and the comps used.

The key takeaways you should get from this article are the following:

  • In a private appraisal assignment, the only parties who know the results are the appraiser and the person ordering the appraisal.
  • The only time an appraisal follows a property is in an FHA assignment that is done for a lender.
  • A real estate agent provides an estimate of the suggested list price of a home while an appraisal is an opinion of the market value of a home.
  • A pre-listing appraisal can provide a market supported opinion of value by an unbiased third party that a seller can use to accurately list their home.
  • A pre-listing appraisal can be a smart choice in the right situation. When you have a unique property or one in an area with limited comps then an appraisal can help you determine its market value so that you can list it at a competitive price.


If you have any additional questions about whether you should get a pre-listing appraisal, feel free to leave a message or contact me by phone or email. As always, thanks for reading.

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  1. Thanks Tom. Yeah, I read that article. I know lots of appraisers pitched in thoughts. There were some glaring errors in the article unfortunately. I saw many colleagues being gracious in their response, which was good. Some of the points made in the article were really off-base. Anyway, thanks for bringing some clarity here.

    • I agree, Ryan. Even though it can be annoying to see this type of misinformation being written it can also serve as an opportunity to educate others on the appraisal process.

  2. Good job Tom. Solid explanation.


  1. 5 Signs That Your Home Is Overpriced And What To Do About It - Keller Williams Consultant Realty says:

    […] can do this by either having a real estate agent perform a CMA or you can get a pre-listing appraisal from a qualified local appraiser. Doing this will also reduce the chances of the home not […]

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