What Do Home Sellers Need to Know About Appraisals?
An appraisal is a professional appraiser’s opinion of a home’s value, but they’re not always a great guide for pricing a home to sell.
What is an appraisal? What role does it play in a home sale?
In short, an appraisal is a professional appraiser’s opinion of a home’s value. Home sellers often ask us whether they should have their home appraised before putting it on the market, and our answer is no. A Realtor is much better at pricing homes to sell than an appraiser is because appraisals only take into account historical sales without considering the homes that are currently listed or what demand is like.
Let’s say you’re in a subdivision where there are two homes for sale, but for the last three months, two homes per month have been selling. That tells us there’s only one month of inventory, which means demand is high and you can list your home at a higher price than what previous homes have been selling for.
"A Realtor is much better at pricing homes to sell than an appraiser is because appraisals only take into account historical sales."
If the homes used as comparables in your home’s appraisal sold in less than 10 days, that means the sellers left a lot of money on the table, and appraisals don’t always take these types of homes into consideration.
Like I said, appraisals only look at historical values, whereas real estate agents look at what’s going on in today’s market and what will happen in the next three months. This isn’t the appraiser’s fault, either—it’s just that the State Appraisal Board has very strict rules of what they must do to calculate their data. In other words, they don’t have much choice in the matter.
We offer free certified appraisals to any seller who wants one, and if the appraisal comes in lower than what we think the value is, we don’t have to share that with anyone. We’ll still list the house at what we think it will sell for—not what the appraisal says.
If you have any more questions about appraisals or any other real estate topic, don’t hesitate to reach out to me. I’d be happy to help you.
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