Selling your house is a difficult decision, a stressful endeavor, and there are many confusing issues along the way, such as how to price your home to sell. Pricing your house may feel like a gamble – price it too high, and it won’t sell. Price your property too far below market value, and you lose money on the deal. So how, then, do you know the best way to price your house? Some experts suggest you get a pre-appraisal, also known as a listing appraisal before you list your home on the market. Here’s what you need to think about when considering having your house pre-appraised.
What Is a Pre-Appraisal
A pre-appraisal is having a professional appraiser assess your house to determine it’s current market value. Although several methods are employed to assemble an estimate, the truth of the matter, when you strip it down to the bare bones, is that an appraisal is an opinion. The appraiser gathers facts from the MLS and other resources, considers the condition of your property, assesses other recently sold homes in your area through a Comprehensive Market Analysis, and provides you with some what he or she deems the house to be worth. Pre-appraisals can cost anywhere from $300 to $700, and sometimes more. Considering that you’re paying for an educated opinion, that may feel like a steep price to pay. There are, however, times when a pre-appraisal can bring peace of mind.
Because the act of appraising a home is a combination of science and art, you may have the home appraised by three individual appraisers and get drastically differing opinions.
What a Pre-Appraisal can Accomplish
A pre-appraisal can help you determine your home’s current value, but it can also help you discover ways you can increase the value of your home before listing.
The appraiser will assess the fixtures and fittings in your home, all the way down to doorknobs and light switch covers. Although this may seem like a nit-picky way to reduce the value of your home, it’s quite the opposite. By respecting the assessment of the appraiser, you can take the negatives and turn them into positives before listing the home. Because appraisers tend to work in increments of $500, a handful of seemingly small details could cost you significantly in the long run.
Another thing the pre-appraisal can accomplish for you is that it can determine actual square footage of living space. Many documents about the measurements of your home could be incorrect. When real estate is priced by the square foot, a tad bit off in measurement could also be an expensive mistake. If you gain nothing else from the appraisal, you’ll at least have accurate measurements.
You won’t be able to use the pre-appraisal as the appraisal required by the buyer’s lender, and buyers may disregard the appraisal as a biased estimate. However, copies of the appraisal handed out during an open house may sway a buyer in your direction.
The buyer’s lender will insist on an appraisal separate and apart from the pre-listing appraisal you obtain, but having the pre-appraisal could help prepare you for the actual appraisal by helping you find problem areas that could be improved.
When Could You Use a Pre-Appraisal
When interviewing potential real estate agents, you may ask the agent how he or she would suggest pricing your home. Based on the same information an appraiser would use, the agent determines what they feel to be fair market value. However, there are two drawbacks to this. In the best-case scenario, the real estate professional is biased. They work on commissions and earn a percentage of the selling price, so they’re going to try to price the home as high as they can at the beginning, and reduce the price later if the home doesn’t sell quickly. The worst case scenario is when an agent uses less-than-honest tactics, insinuating he or she can get you top dollar. The estimate provided by the real estate agents could be separated by a large enough gap to have you scratching your head. That’s a good time to get a pre-appraisal. The pre-appraisal helps you gauge which agent was closer to the mark.
You may also want the satisfaction of having an unbiased third-party professional assess the property. You can compare that estimate with online home valuation calculators, the real estate suggestions, and the comprehensive market analysis to hone in on a price you feel is fair for the sale of your home.
The other time a pre-appraisal is a great benefit is if your house is unique. In tract housing, it’s easier to gauge the price because so many houses in the area are similar. But if your house does not match the size, design, or features of other houses in your area, it may be more difficult to price based on a comprehensive market analysis and a professional opinion could be of great value.
When you get a pre-appraisal today, that estimate may be invalid by this time next week. The real estate market shifts, it changes drastically from one moment to the next. By next week, your home could be worth far more, or much less, than it is when you ordered the appraisal.
Do you need a pre-appraisal? No. Could you benefit from having your home pre-appraised? Perhaps. If you have a real estate agent you trust, the agent can probably as good as or better of a job at pricing your home than an appraiser could because the agent is familiar with the niche in which they work.
Assess your reasons for wanting to order the service, weight the reasons against the costs, and decide whether or not a pre-appraisal is in your best interest. If you decide to have your house appraised before listing, understand that you should take the estimate with a grain of salt and know that it’s simply an educated guess that could shift with market trends and not a sure-fire stand-alone method for pricing your home. Instead, use the pre-appraisal in conjunction with other methods to find the best-suggested value for your home.
Call The Wright Choice Team today at 804-307-2589 to tour available homes for sale in the Chesterfield County area.