Inspection and Appraisal Before Selling: Pros and Cons
Deciding on a property’s list price can sometimes be very challenging for the homeowner and even the listing agent . The seller and the real estate agent may not be in agreement on what the initial list price will be. This is where an appraisal is needed.
Pre-listing appraisal is an appraisal being done at the request of the property owner or agent prior to the for sale sign going up, or the property being listed in the MLS (Multiple Listing Service). The appraiser will provide an unbiased opinion of the value based on other properties that have already sold in the same market.
We have listed some of the PROs and CONs of doing a Pre-Listing Appraisal.
Let’s start with the CONs:
1.The price to pay for the pre-listing appraisal.
Of course, no one wants to spend extra money, however, the initial list price is crucial in gaining market exposure and attracting potential buyers. Overpriced properties will typically spend more days on the market. The contrast to that is that no one wants to leave money on the table by undervaluing what is possibly their largest asset.
2. The buyer will get it appraised.
If the buyer is financing the purchase, the lender will order an appraisal. This is a requirement of the lending process, but will be paid for by the buyer.
3. Sometimes it is upsetting.
As homeowners, we often have an emotional attachment to our homes, or even investment properties and it can be upsetting to learn that market value may not be what we thought. The appraiser is providing an unbiased outside opinion – meaning they have no “skin in the game”. The appraiser is the only person in the process who has no vested interest in the value, but is merely reporting the market data.
4. The appraised value is the same what the listing agent suggested.
This would be a great scenario. This indicates that the listing agent is familiar with the market area, and has done the necessary market research. The homeowner can rest assured that they are making an informed decision.
Here are some PROs of Pre-listing Appraisals:
1.The seller will be at ease.
Both the seller and the agent will be confident that they have the correct property measurements and an accurate list price.
2. It will give the seller a chance to do repairs or renovations.
The appraiser is not a home inspector, but will identify deferred maintenance items that can impact value, or prevent financing from going through. The appraiser can also provide a value “as is” in the current condition, as well as an “as repaired” value.
3. No haggling.
The owner can use the pre-listing appraisal as a negotiating tool when an offer is received.
4. Gain trust from the buyer.
If the homeowner chooses, they can share with a buyer what the appraised value is, making the buyer confident that they’re getting the fair market value of the property that they want to purchase.
5. Makes the real estate agent’s job easier.
Professional realtors know how to analyze real estate data. Having accurate measurements and a current market value from an appraiser is a great additional tool for the realtor to rely on.
In every situation there is always a positive and negative side. It’s just a matter of setting the right expectations to avoid unnecessary stress and confusion. Pre-listing appraisal is not needed for every property selling but is definitely recommended. It’s crucial for both the seller, buyer and real estate agent to know the real value and room for improvement or renovation of each property.
Overall, the appraisal cost is an incredibly small percentage of the cost associated with buying or selling a property. After all, how much is peace of mind worth?