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Should Sellers Hire an Appraiser?

Pricing a listing is one of the hardest— and perhaps most important — tasks in residential real estate. Did you know that Coldwell Banker SKS Realty provides FREE Competitive Market Analysis (CMA), which will provide you with the estimated value of your home?

Sellers can get it wrong in either direction: If the asking price is too low, the sellers might end up leaving money on the table; if it’s too high, they won’t tap into the right target group, will lose a lot of time and may end up selling for even less.

Sometimes, the seller and the agent might not agree on a price. And even if they do, the sellers might look for some “objective” method to corroborate their number. That’s why our listing clients frequently ask us if it’s a good idea to get an appraisal before they put the house on the market. But should you?

Well, it depends on your reasons.

Independent appraisers are often hired by potential sellers. Usually, the owners call an appraiser because they have talked to several different agents and get very different suggestions for a price.

Also, in limited-service or for-sale-by-owner situations, a full professional appraisal might be an important reality check. The same might be true for buyers who are not represented by an agent and need to make sure they won’t overpay.

In most other scenarios, however, you don’t need a pre-listing appraisal. In fact, for the seller, it might just be a waste of money. Here’s why:

●There’s no such thing as an objective valuation. The textbook definition of an appraisal: It’s an “opinion of value.” That pretty much says it. There are a lot of ways, techniques and choices appraisers have available to support that “opinion” with facts, but it’s an art rather than a science. Even the most experienced appraiser will admit that there’s often an element of gut feeling that can’t be quantified. Hire three appraisers, and you’ll get three different values. It’s not the appraiser that determines what the house will sell for, “it’s the market.”

In areas with large, newer subdivisions (and dozens of similar houses) it’s easier to be objective, especially when there have been similar sales in recent months. In a rural location like Bedford, though, the housing stock is older, and no two houses, blocks or neighborhoods are alike — nor can they easily be compared.

●Your Coldwell Banker SKS agent might do just as well, or sometimes even better. Typically, they have access to the same information (comparable sales, MLS data, tax records) the appraiser uses. But they also know their market niche better and have been inside the “comps.” Their CMA might not be as structured and uniform, but it will cast a wider net and put more emphasis on the surrounding market conditions.

●Your buyers will not care. They will want their agent to analyze the comparable sales as well as the specific qualities and features of the house and neighborhood. An appraisal procured by the seller is often seen as meaningless and biased, no matter how solid and well-founded.

●The buyers’ lender will not be interested in your appraisal, either. They will always order their own, either because they need to protect themselves and will only trust a handful of proven appraisers, or because it’s required to make the mortgage saleable to investors (or the government) afterwards. It’s a common misconception that an appraisal ordered by the seller will “save” the buyer that step.

●We are in the middle of a fast-changing market. If you get an appraisal now, it might be completely obsolete by the time your house sells. The upheaval of the past couple of years has shown that new comps, new government policies or increased interest rates all can change the picture very quickly.

The bottom line is, if you believe your agent is totally wrong about what he or she thinks your house should sell for or if you’re selling without a broker altogether, then, get an appraisal.

Otherwise, hold onto your checkbook and leave it to the buyers to get their appraisal.

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