ICYMI: The Price is Right: Appraisal vs. Home Market Evaluation

December 26, 2016 Marketing

If you’re in the market to sell your home, often the first place you check is online, right? Various sites will show you recent sales, market trends, and the value of your house.

However, trying to get an accurate depiction of your home’s value is similar to trying to diagnose unusual symptoms you’re having on WebMD; in the end, you really need to see a professional. Although both sides are credible, when it comes down to it, there’s really only a few ways to accurately gauge what your home could actually fetch. Here are two:

Appraisal

An appraisal is a paid service that entails the hiring a local, licensed professional to measure, preview, and score your home. Appraisers undergo rigorous training and licensing therefore, carry dogmore clout than just a licensed agent when it comes to pricing. Although both parties have access to the same information in terms of comparable properties, appraisers have been trained do discriminate, compare, and adjust the value of your home on many levels.

Usually, sellers do not order an appraisal “out of the blue” just out of curiosity. If you’re selling your home, the buyers’ lender often must order the appraisal, and cannot influence the price of the property. Since the market crash, measures were put in place to prevent under-handed deals  between loan officers, lenders, and other real estate professionals. We have all witnessed the aftermath of what can happen when the value of homes are over-inflated and created out of thin air.

Here’s the catch: an appraisal is still an opinion. Appraisals are typically more conservative than a home market evaluation, which is why banks use them to protect their mortgages. If you hire three different appraisers, you’re likely to come back with three different numbers, which is why a Market Evaluation may be a better route for you.

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Home Market Evaluation

If the figure for your online home estimate comes back at between $50,000 and $250,000, you might want to bring a qualified real estate professional into the picture. It’s important to communicate your intentions, as this makes a difference in setting a price for your home.

For instance, let’s say you’ve owned your home for 10 years, have never refinanced, and you have built some equity. However, you have never updated the kitchen, and don’t have the cash to do so. You’d rather sell the house in the condition it’s in than spend anything out of pocket to pay for upgrades like bamboo floors and marble countertops. Unlike an appraiser, the agent is not required to take into account replacement value, or cost per square foot. They simply have to understand the specifics of your home and show you metrics based on similar properties. What’s said today may not be the same six months from now either—it doesn’t matter what your home was “worth” in 2007, or even last year. If you hold off on selling your home until a later date, you’ll need to get an updated opinion.

If you do move forward with listing your property, and it goes under contract with a financed buyer, the appraisal would then be ordered anyway.

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Pricing

Whichever method you choose, how you go about marketing and pricing your property is even more important. In an appreciating market, you’ll get away with not having to fix as many things, and may even get more than you originally thought. It’s always important to price your house right though, and take a tactical approach. In a buyers’ market, borrowers will have more inventory available to choose from. It will be more important that your home show well, you can make repairs, contribute toward closing costs, or be able to give a discount.

Your best course of action is to interview several real estate agents to find the most informed and experienced professional who not only understands your needs, but can also educate you about what is happening in your local market. There’s no need to list your house with someone who promises you the sun and the moon just to get your business, only to have you become disappointed and frustrated when their (or your) pie-in-the-sky number doesn’t produce a ready buyer. Keep in mind, all agents have access to the same information, so the market valuations provided should not bear huge gaps.

Working with someone knowledgeable and proficient will most likely get you to the number that you really care about most: your bottom line.

Have you ever sold your home, or are you looking to sell your home? Do you have any tips you found helpful during the process? Leave a comment and let us know what your experience was like.

This entry was originally published on February 16, 2015.

Girls Guide to Real EstateThis guest post was contributed by Girls Guide to Real Estate

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