Whenever a home is sold to a buyer who is financing their purchase, the lender requires a third party appraisal to verify the value of the property and determine what they are willing to borrow. Separately, sellers also have the option to get their own pre-listing valuation to determine an asking price. That begs the question: Do I need to get an appraisal before I sell my house?

Typically, a top broker’s CMA (Comparative Market Analysis) is all you need to gauge what a buyer is likely to pay for your home, saving sellers the additional $500-$600 cost of ordering an appraisal. And you can always get a free online home value estimate as a starting point. However, certain scenarios may warrant obtaining a pre-listing valuation. In this guide, we’ll discuss what those special circumstances might be so you can make an informed decision.

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Consider an appraisal if your home…

The properties below can make a home more difficult to value and may warrant an appraisal to determine a price.

Unique features that are hard to appreciate

In an area where the homes all look alike, it’s easier to find comparative sales or “comps” to identify a home’s price range and then adjust its value up and down, whether it has an extra bedroom or less updates.

But for homes with unique features — such as a detached in-laws, tennis court, generator, solar panels on the roof, or even a bowling alley in the basement — it can be more difficult to predict how the market will react. And you’re unlikely to find recent real estate sales with the same benchmark features.

“If the unique features are bells and whistles that aren’t common in a home, then maybe it’s more of a ‘nice to have’ than a ‘must-have’,” says Nick Ron, CEO of residential real estate investment company Home Buyers of America. “These types of items are hard to praise.”

Take the home of an Indiana seller that was significantly larger than other properties in the area. Like a stilt barn with living space above it, the home couldn’t easily be compared to adjacent properties, shares Brad Taflinger, a top real estate agent in Muncie, about 50 miles northeast of Indianapolis.

The homeowner, Taflinger’s client, had built the house and garage and had a sentimental attachment to his work and the craftsmanship.

“His price and mine were polar opposites,” Taflinger recalls. “In that case, I suggested that he contact a licensed appraiser before taking the list.”

Rural location

A CMA compares the property in question to nearby homes that have similar characteristics, were built around the same time, and have recently been sold or under contract. This data is readily available in suburban or urban areas, and even more so in planned development communities with a lot of market activity to pull from. But in remote locations, recent comparable sales can be hard to find, making it challenging to assess a property’s market value.

At Taflinger’s Indiana Market, he works with many rural properties, including many horse ranches with outbuildings, stilt barns, mobile homes, and even covered riding stables. In a recent example, he looked at seven or eight farms with values ​​ranging from $225,000 to $699,000.

“With so many different variables, rural properties are never easy in terms of valuation,” he says. “In that case, it would be good to have an appraisal done in advance.”

Additional land or acreage

Excess or excess land is another problem that can make it more difficult for a homeowner to measure the value of a property.

“When analyzing additional land or acreage, an appraiser must consider that land’s size, zoning and potential uses in order to develop a credible judgment about its value,” says John Brenan, chief appraiser at Clear capital, a national real estate appraisal and analysis firm headquartered in Reno, Nevada.

“For example,” he adds, “if a property has additional land, but that land is located in a flood zone where improvements are not possible, that would be materially different from additional land that may be separate from the primary sale could be sold. property.”

The most important valuation factor for additional acreage is whether the land can be cultivated or divided, he adds Omer Reiner, a real estate investor and president of Florida Cash Home Buyers, has been buying and selling real estate since 2011. “If so, the seller may want to get differing opinions about the value of the property as it is and once it’s subdivided,” he explains.

A homeowner uses her laptop to research whether she should get an appraisal before selling her home.
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Other reasons to get an appraisal

Let’s say the above factors don’t apply to your home. It is not in a rural area and surrounded by similar properties. You may still want to get an appraisal in the event that:

You inherited the house

If you have inherited a home and plan to sell the property, it may be helpful to get a listing valuation beforehand, especially if you are unfamiliar with the area or if the home has unique or historic features that make it unique. make it difficult to determine its value. An appraisal can also be helpful if the house has been inherited by several heirs who cannot agree on a price. In addition, an appraisal may be required as part of the process of inheritance.

You will not receive any offers

If you’ve made the decision to list your home based on your real estate agent’s CMA and it’s been on the market for a while with no offers coming in, it may be time to hire your own appraiser. In many cases, the problem with a stagnant offer is that it is not priced correctly.

Disadvantages of Getting an Appraisal Before Selling

If you decide to get an appraisal before you sell, keep the following in mind:

It costs money

When valuing a traditional lender, the associated costs are usually the buyer’s responsibility. But if you order your own appraisal before listing it, you’ll have to pay the cost out of pocket.

According to Brenan, the cost of a valuation is determined on the open market and can vary widely based on the type of property and the complexity of the assignment.

“For homogeneous real estate in markets with significant recent sales data, an appraisal could be anywhere from $350 to $750, or even higher,” he says. “As the complexity of the assignment increases, the valuation fee usually follows.”

Taflinger says most appraisals in his Indiana market are in the $400-$500 price range, but for homes with very unique features, horse ranches, or commercial properties, the cost can be as high as about $2,000.

The lender will still need an appraisal

“It’s important to understand that a lender cannot use a pre-listing appraisal to make a loan decision for a potential home buyer because the law requires lenders to directly involve appraisers in credit transactions,” notes Brenan.

Two appraisals can also result in two very different numbers – so your appraisal ordered by the lender may still be less than the value assigned by the pre-listing appraisal. In other words, no matter what happens with your pre-listing valuation, a lender will still order their own third-party valuation to determine how much they are willing to lend the buyer.

If the valuation falls below the contract value, that difference will have to be compensated in some way. The buyer can bring extra money to the table, you can lower your price, or you can compromise somewhere in the middle. Or the buyer can rely on their unforeseen review and walk away from the deal altogether.

A real estate agent who helps a client determine if they should get an appraisal before selling their home.
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On the fence?

Talk to an agent if you are not sure

A good real estate agent can advise you whether the extra costs of a pre-listing valuation are necessary to sell your house. And even if you opt for a pre-listing home valuation as a pricing tool, that doesn’t diminish the value of a broker’s input. Agents and brokers are experts in not only pricing, but also preparing and selling real estate.

While many homeowners may feel they know the value of their properties, agents and brokers who specialize in the homeowner’s market are aware of recent trends and can identify those aspects of a property that can attract more buyers. help emphasize,” notes Brenan. “They can also make suggestions on what needs to be done to get a home ready for sale, such as a refurbishment, carpet cleaning, etc.”

If you’re not sure where to start your real estate agent search, HomeLight will be happy to introduce you to some of the top quality candidates in your area.

Choose a pricing strategy

The decision as to whether or not to pay for a pre-listing valuation comes down to the property’s uniqueness or special features, the availability or lack of sales comparisons, any uncertainty that may come with an inherited estate, and other mitigating factors specific to are for your situation. If you would like an independent idea of ​​what your home could be worth, or if you think the property is particularly complex in terms of price, request an appraisal. Otherwise, don’t hesitate to use your agent’s CMA – that’s what it’s for!

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