The Power of the Appraisal

The appraisal can be a home seller’s biggest fear.  You and your listing agent have priced your home for what you believe it is worth, usually based on market conditions and recent comparable sales.  Your buyer is all in – ready to move ahead and move in.  But the dark cloud looming on the horizon is the appraisal required by the lender.  Where will the appraised value come in?  Will the buyers get their financing? What if the deal falls through?  Both buyers and sellers are on pins and needles until the appraisal is completed.

With all of the power that an appraisal wields, it’s amazing that more home sellers don’t use this tool to their advantage.  Appraisers don’t just work for banks and other lenders.  As a seller, you can ask a  prospective listing agent if they have an appraiser they recommend and work with.  This should be one that knows the area well, is reasonably priced, and is willing to do a Maximum Sale Price Appraisal.

A Maximum Sale Price Appraisal is based on ideal circumstances and ideal market conditions. It reflects the highest price at which the property would sell.  How is this valuation different from the prices prospective listing agents provide?  An appraiser bases her opinion on objective facts, market data and a number of accepted methods of analysis.  Appraisers are held to high standards and definitive rules that require appraised values to be supported by specific facts, prescribed adjustments and data scrutiny that conforms with standards set by the American Appraisal Institute.

As a homeowner, your opinion of the value of your home may involve emotion.  We all love our homes and obviously want top dollar when selling.  A listing agent may base her pricing on general knowledge of the area, but could tell you what you want to hear, pricing the home higher to secure the listing. If a Realtor says she can sell your home at a higher price, isn’t that better?

Not necessarily. An overpriced house will most likely sit on the market for a long time, becoming less and less desirable to buyers. Buyers naturally presume when a home lingers unsold it is overpriced or something is wrong.

Instead of gambling on a listing agent’s estimate, get a Maximum Sale Price Appraisal up front. It is a few hundred dollars really well spent to know what your house is actually worth so that you can price it to sell quickly. This type of appraisal also gives you the peace of mind that you are asking the maximum amount that a lender would appraise the home for.

It is also a valuable marketing tool for your listing agent. Having an appraisal in hand will set you apart as a seller.  It takes away the fear for buyers and lets them know that you are asking for a fair price at the appraised value. The good news for you is this is a maximum price appraisal so it may motivate buyers to pay more than they otherwise would. The knowledge that the house has already appraised for the asking price is an extremely powerful incentive for buyers, whether they require financing or not.

As a home seller, it’s important that your home stand out and appear to be priced fairly. You would be wise to work with a listing agent based on their experience and track record at selling homes and let a certified appraiser guide you on value.