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Should You Appraise Your Home Before Selling It?

Recently, Rick Schwartz Homes Corporate held its annual off-site planning and bonding meeting. This took the form of Shereen and me going to Pop’s Pizza Plus in Danbury and putting the charge on my business VISA card.

One of the items we covered at our meeting was to review web data from the last year. In looking at the tracking results from the Rick Schwartz Blog, we found that in the 17 months since we started the blog, two particular articles have far and away had the most hits.

Our posting from June of 2008 “What is the difference between appraised value and assessed value?” has been viewed 1,270 times which makes it the number one article by leaps and bounds.

The number two posting is “What if your home doesn’t appraise for the selling price?” This has had 721 hits since it posted in May of 2008.

It seems that the subject of appraisals is a “hot topic”. So – here’s a bit more.

We polled some top Realtors in the area and asked them the following question: Would you recommend to your clients that they pay for an appraisal prior to putting their home on the market?

4 out of 5 responded that in today’s market where prices have been changing so rapidly, having an appraisal done can help sell a home more quickly.

Here’s the rationale.

First of all, a licensed appraiser will perform a detailed analysis of all the factors that make up the value of a home. The tools and training that an appraiser has at his disposal are the most comprehensive available. In addition to looking at recent market activity, they calculate your home’s value using a few other methods – one based on replacement cost and one based on square footage.

Averaging these values together and then using a series of “adds and subtracts” based on the specifics of your property will provide you with an accurate value to aid in determining what list price to apply.

Remember – this is his primary activity – determining the value of homes. The value put on a home by an appraiser is what a lender will use in making decisions about loaning money to your potential buyer. (They will do their own appraisal at the time of the sale.)

Sometimes, when your Realtor provides you with a market analysis, it may differ from your own perception of what the house should sell for. Having this third party expert who has no stake whatsoever in your sale can arbitrate the difference and help you set an accurate price.

Another value to having an appraisal up front, is that, when it comes time to negotiate, you and your Realtor have 3rd party support for your position. You aren’t obligated to share the appraisal with anyone – you paid for it and it’s yours, so if you choose to try and sell your house for more, that’s your business – so long as the buyer can obtain a mortgage, should he need one. If, however, you price your house correctly, using the appraisal as a guide, it can, pretty quickly, take the wind out of the sails of someone who is trying to low-ball you.

To make sure that I’m presenting a balanced article, there is one situation where it may be unnecessary to do this. If you live in a neighborhood with many similar houses (such as a planned community or a condominium/townhouse complex) and a fair amount of recent market activity, then the “right” price should be fairly simple to determine.

Your Realtor can help you find a licensed appraiser in your area.

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