When you begin thinking about the potential of selling your home, you have to ask yourself, “What’s my home worth?” You are the only one who can set the asking price for your home for sale. You may get suggestions and expert advice from your real estate agent. You may also hear references to the term pre-appraisal. A pre-appraisal is the act of hiring a professional appraiser to assess the current market value of your property. But, as you might suspect, there are two sides to every coin. Some people suggest a pre-appraisal is a smart move while others consider it a waste of money. Ultimately, just like setting the asking price on your home, you’re the only one who can determine whether or not a pre-appraisal would be a wise investment for you before listing your house.
What a Pre-Appraisal Does
A pre-appraisal may help you determine the best list price for your home, especially when used in conjunction with other tools and methods. A pre-appraisal can also contribute to revealing problem areas, the need for repairs, or additional ways you can significantly raise the perceived value of your property before listing.
Appraisers usually base their estimates on $500 increments. Your house may have what you assume to be insignificant shortcomings such as cracked electrical socket covers, rusty doorknobs, dated cabinet handles, squeaky doors, torn window screens, stained sinks, or other tiny tidbits that we tend to overlook in daily life. Individually, these items may cost only a few dollars and minimal time to upgrade. However, in the assessment of your home, those little concerns could equate to a loss of $500 or more. Therefore, the pre-appraisal could assist you in preparing the house to sell for a higher value.
County records and other documents detailing the square footage of your home may be inaccurate. A listing appraisal will determine the actual amount of living space, which could increase your home’s value based on price per square foot.
In your interview process with potential real estate agents, you may have received differing opinions of how you may want to price your home. In some cases, these numbers may be nearly identical, but in other situations, the suggested value may differ by leaps and bounds. A pre-appraisal can help you determine which agent is closer in their suggestion. It’s not unheard of for some real estate professionals to use shady tactics to obtain the listing, including implying a greater selling price (or lower commission). The pre-appraisal, or listing appraisal, can help you weed out false hopes.
Finally, the pre-appraisal generates an out-of-pocket expense you must pay strictly to have the information for personal use. Pre-appraisals typically range in price from $300 to $700 and up, depending on circumstance.
What a Pre-Appraisal Doesn’t Do
The pre-appraisal does not guarantee you’ll receive a particular amount for the sale of your home. Although an appraiser’s assessment can help you arrive at a fair asking price based on location, condition, size, and similar sales in your area, the appraisal is an educated guess based on experience using a variety of tools and measures to formulate an opinion.
Although some agents do provide copies of the evaluation during open houses to support their marketing endeavors, buyers don’t usually put too much stock in a seller’s appraisal. Even if the appraisal is respectable, on the up-and-up, and on-point with accuracy, buyers view the seller’s pre-appraisal as biased.
When the buyer applies for their home mortgage loan, their lender will require an appraisal of the home to satisfy whether or not the home is worth the amount the borrower requests. The pre-appraisal you obtained to gauge how to price your home to sell, or how to make repairs that can increase your home’s value, will not suffice. The buyer will still need to have the home appraised for their lender, separate and apart from your pre-appraisal.
Pre-appraisals do not guarantee that your home will hold the same value next week as it did when the appraiser conducted his or her assessment. The real estate market shifts and home values move with the ebb and flow of the market. An appraiser, therefore, doesn’t determine the value of your home; the real estate market does. Moreover, the buyer does.
The Difference Between Agent Advice and Appraised Value
The real estate agent you hire to work with is an excellent source of advice and expertise, especially when it comes to pricing your home to sell. In fact, the real estate agents access the same information used by appraisers to determine your home’s value. Where the appraiser may use additional resource for finding and verifying facts about your home, the real estate agent has a deeper understanding of the real estate niche they serve. In essence, the real estate agent has their toes in the water. The downside to using your real estate agent to appraise your home’s value is that the real estate agent has ulterior motives.
Real estate agents work strictly on commissions, so they don’t get paid until your house sells. Additionally, the amount of money the agent earns is in direct relation to the price for which your home sold.
The Middle Man
When you sell your home, you may feel like the middleman when it comes to pricing and appraisals. Your real estate agent has their own agenda – sell your house for as much as they can. The lender, too, has an agenda – don’t let out more money than the house is worth. However, obtaining an independent pre-appraisal is to hire a non-biased third-party professional who has no vested interest in the sale of your property.
Is it mandatory that you have a pre-appraisal before listing your home for sale? No. Can it be helpful? Sometimes. When your primary goal is to get a rough idea of what you might earn on the sale of your house, and you also want to discover ways to improve your home’s value, a pre-appraisal might be a reassuring piece of information to have. However, even with the pre-appraisal, you should consider basing the price of your home on the aggregate data you’ve gathered such as an online valuation, the real estate agent, the comprehensive market analysis, and your awareness of the current real estate conditions.
Your real estate agent is the best source of information about the local community and real estate topics. Give Sheri George a call today at 704-224-1166 to learn more about local areas, discuss selling a house, or tour available homes for sale.