When you’re preparing to sell your home, you may face the question of whether or not you need a pre-appraisal, also called a listing appraisal. In some situations, a pre-appraisal is a wonderful idea that provides assurance and peace of mind. Yet, in other situations, a pre-appraisal could seem like a complete and total waste of money. Here’s what you need to know about having your home pre-appraised.
How do Appraisals Work?
Appraisals are based off of data and personal inspection to determine the fair market value of a property. The data used includes, but is not limited to, comprehensive market reports, MLS listings, legal documents specifying square footage, etc. The information is designed to supply the appraiser with noteworthy information before they evaluate the condition of the home.
When the appraiser comes to your house, they’ll begin their assessment from the outside. He or she will be looking at how the structure has aged, the condition of the fixtures, and the quality of landscaping. Inside, the appraiser considers flooring, damage to walls, and other items that appear to be in disrepair or disarray.
With the data in hand and the assessment complete, the appraisal then submits to you a report suggesting the fair market value of your home.
When push comes to shove, an appraisal can be defined as an opinion. It’s an educated opinion, but an opinion nonetheless. There are scientific methods such as assessing the data, but there’s a personal or artistic element in considering the condition of the property and its fair market value. You could ask three separate appraisers to assess the property and receive three very different estimates. But that doesn’t mean that pre-appraisals aren’t beneficial.
Increasing the Value
The appraisal might just be an opinion, but it’s an opinion that could increase the value of your home substantially. When the appraiser assesses your property, he or she notes torn or bent window screens, rusty doorknobs, squeaky doors, cracked socket covers, drippy faucets, and other items that could be inexpensive and relatively quick to repair. But, most appraisers measure in $500 increments, so imperfections that seem insignificant to you could end up costing you, literally, thousands of dollars. Review the report from the pre-appraisal and make repairs before listing your house for sale. Not only will it increase the perceived value to potential buyers, but will also set you up nicely for the formal appraisal ordered by the buyer’s lender.
The appraiser can also give a more accurate measurement of the living area within your home. Some records may indicate the square footage of your home, but those records aren’t always accurate. Since real estate is priced by the square foot, an inaccurate measurement could be a costly mistake.
Pre-Appraisal vs. Required Appraisal
Your pre-appraisal is for personal use. It can help you determine the price you decide to put on your home, can help you be aware of repairs you can make to increase your home’s value, and may even serve as a marketing tool during showings to substantiate your price. However, that appraisal has no value to anyone other than you. Buyers may see your listing appraisal as biased or fabricated. The lender won’t accept your pre-appraisal, either. So know that if you opt to obtain a pre-appraisal before listing, you’ll still need to welcome another appraiser to satisfy the lender.
Real Estate Agent Expertise
If you are working with an agent who you know and trust, you may be able to skip the pre-appraisal altogether. Real estate agents have knowledge not only about the fabric of the industry, but also the neighborhoods, communities, and niches they serve. Real estate agents can tap into the same pool of information the appraisers use, and can give you fair advice about how to prepare and price your house to sell. However, the agent knows that the higher the selling price on your home, the higher their paycheck will be. For this reason, if a home is appraised between $400k and $500k, that agent might suggest you start at the high end and work your way down. Working your way down never translates well because it means your house stays on the market longer, and may be subject to several price reductions.
The Battle of the Agents
If you’re not yet working with a professional, qualified real estate agent, you may be in the interview process. In that process, you may discover that one agent suggests your home may be worth $800k whereas another agent suggests your house might exceed a million dollars. Those numbers are pretty far apart. To get numbers so different, either one agent is way off their mark, or worse, is attempting to influence your decision by implying he or she can get a higher sales price. This is a case where a pre-appraisal will serve you well.
The Test of Time
Your pre-appraisal will not stand the test of time. As a matter of fact, it might not even make it to the end of the week. The real estate market is not fixed; it shifts and sways and fluctuates based on a number of factors, all of which are out of your control. Do not depend on that pre-appraisal to last indefinitely.
The Final Answer
You may have sought out a free home valuation online. You may have asked your real estate agent’s advice. You probably reviewed the CMAs, and possibly got a pre-appraisal. All of those tools rolled into one collective can help you decide what price might be best for your home. However, the true determining factor for what your home is worth lies in the hands of the buyer. Ultimately, what the buyer is willing to pay reveals the truth of what your house is worth.
Do you need a pre-appraisal. No. Pre-appraisals are not required and serve no purpose other than your own satisfaction. But that doesn’t mean you won’t find peace of mind and assurance in knowing you’ve pulled out all the stops in determining the best price for your home to sell.
This information is provided courtesy of The Eastside Real Estate Team. Keep us in mind for all your real estate needs. Call us today at 425-200-4093.