When Is The Best Time To Order A Pre-Listing Appraisal?

When Should I Order a Pre-listing Appraisal?

When should you order a pre-listing appraisal? This was a question I was asked this week by a homeowner who was doing some work on their home that was going to take about a month to complete.

When Should I Order a Pre-listing Appraisal

They wanted to know if they should go ahead and get the appraisal out of the way so that they could list it when it was finished. Since I’ve been asked this question before I thought I would share my thoughts with others that may be curious. First off, let’s discuss what a pre-listing appraisal is.

What Is a Pre-listing Appraisal?

A pre-listing appraisal is one that is done prior to listing your home for sale. It is done in order to sell the home for a price that is as high as possible but also supported by market data.

Everyone wants to sell their home for as much as possible but if it’s too high (not market supported) then it will sit on the market too long and you’ll eventually end up reducing the price. The final sale price may be even lower than if you would have listed it for a reasonable amount, to begin with.

Like all appraisals, a pre-listing appraisal takes into consideration the most recent and similar sales in order to measure the temperature of the current market. Most people know when the market is hot or cold but how do you translate that into a price you can put on your home? An appraisal can do this for you.

Timing Is Everything

An appraisal is most reliable and accurate when recent comparables are used because they tell the story of what is going on in the market right now. When I say comparables I’m talking about actual closed sales, pending sales, and active listings.

Ideally, an appraisal should be performed as close to the time you want to list the property so that the most recent comparable information is used. The longer the period between when the appraisal is performed and the property is listed the less reliable it will be.

If you get an appraisal and there is a significant amount of time before you list your home there could be some sales that occur during the gap in time that might be relevant to the valuation of your home.

In the example above, my best advice would be to wait until the work is completed and then get an appraisal. This will allow the appraiser to use the most recent comparables and therefore provide an appraisal that reflects the current market.

There are also some other tips that I would like to offer homeowners that can help the appraiser in completing the appraisal assignment.

At the very least the appraiser should be provided with a list of recent improvements made to the home. If you have the dollar amount you spent that would be awesome to give them as well but if you don’t have it that is fine.

It’s important to provide a list of the most significant items, especially the ones that cannot be readily seen. This may include a new roof, HVAC system, new electrical work, or plumbing.

Other items to include would be kitchen and bath remodeling, or the addition of extra living space such as in the basement. The appraiser will most likely notice the condition of your home but may not know that it was added since you bought the home.

Appraisers must analyze the sales history of a property so if you’ve added a living area since you bought it this could support a higher value if your purchase was a recent one.

Appraisers have access to most sale data, however, I always ask owners if they know of any sales that have occurred in their neighborhood just to make sure I do not miss out on any. In today’s market homes are listed and sold so quickly that the sale data may not show up immediately in public records or the local MLS unless you know where to look and providing this information to them can help.

Finally, I would like to say that getting your home in tip-top shape for the appraisal cannot hurt. Appraisers are taught to overlook clutter and messiness, however, a home that shows well and does not need any repairs comes across a lot better.

Conclusion

Timing your appraisal as close to the time you will list it will help you price it using the most current market data. This will ensure that it is priced to the market and assist you in getting the highest market-supported price possible. Having it in tip-top shape with no necessary repairs will also go a long way in increasing its value. If you have any other questions about pre-listing appraisals feel free to contact me and as always thanks for reading.

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

 

 

 

Comments

  1. It’s so tough these days because appraisers are often backed up. Getting something as close as possible to the list date is a tall order for me at least lately. But I get what you are saying. I think this is particularly valuable if the owner and agent are WAY off on what they think a reasonable price ought to be.

    • I agree, Ryan. Appraisers have definitely been slammed lately. I think a pre-listing appraisal is extremely important in today’s hot market with multiple offers. I have seen many contracts that are way above market value where the buyer made the offer in order to get the home without any forethought about whether it will appraise. A pre-listing appraisal will help them determine what the upper limit of value is which will aid them in making an offer.

  2. Kathleen Morris says

    This question was probably already asked in the past but I need a refresher. Is an appraisal for
    a refinance different than an appraisal for a home for sale? Does an appraisal for a refinance
    a requirement for a house inspection? – for which I we understand that a house inspection is only for an interested buyer of a home to request before making the final deal? I am asking this question because we ONLY are seeking a refinance ( for a much lower interest rate and to consolidate some credit cards). We are not selling our home. We have tried this a year ago and the appraiser did an inspection.. for which we do not believe was required in a refinance ? We made it clear to the appraiser we were ONLY refinancing. To make a long story short this appraiser ridiculed us for making a list of the many home improvements we had done, and even stated we were not suppose to do that! When her unfair appraisal was done she left out about $150,000 of our home improvements which included an in-law suite, oak flooring in 4 rooms, built ins (12 drawer dresser , book cases, and office area in the master bedroom,) new roof, & sun room. We were very upset about this and therefore withdrew our refinance application. We refused to pay for this scam appraisal as well. Now, one year later we are going to try it again. If you have any further advice for us please do. The appraisal process is very stressful to have to deal with such unpredictable unfair appraisers.

    • To my knowledge a refinance does not require a home inspection. If the loan is using FHA/HUD financing the appraiser will have to consider repair items more so than what is done with a conventional loan. This may be what is happening. All of the FHA-required repairs must be complete to qualify for the FHA loan. In my opinion, the appraiser should not have discouraged you from providing information regarding improvements to your home that you have completed because knowing this can help with a more accurate appraisal. If the appraiser did overlook $150,000 of home improvements that are significant and you may want to request another appraiser.

Trackbacks

  1. […] Real estate agents get bombarded with questions daily. One of these reoccurring questions the author of this article, Tom Horn, encountered was when to order a pre-listing appraisal. […]

Speak Your Mind

*

Call Now Button

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.