wendy, Both Buyer and Seller in Simi Valley, CA

Appraising a home BEFORE listing it?

Asked by wendy, Simi Valley, CA Mon Sep 29, 2008

I know that appraising a home is a vital part of closing escrow, so my question is, since it is such a vital part and the appraisal could very well come in under the selling price, why isn't a home appraised before it goes on the market to help seller's realistically list their home?

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12
Vanessa Boone, , Philadelphia, PA
Mon Sep 29, 2008
That would be realistic to get an appraiser to appraise the home, if it's worth more than they original brought it for. But you have to realize that in a down market, the appraisal may come way less than what they brought it for. Usually, an appraisal is done when they take the subject property and compare it to other property that are similiar to the subject property to come up with what the home is worth. If that is the case and the seller is trying to get out of the mortgage and the appraisal comes back less than their mortgage balance, they are not going to accept the appraised value of the home. They want to atleast break even if they desperately what out. I believe another agent brought up the fact that mortgage companies would want to use their appraisals. I wouldn't trust the seller's appraisal. They may have a friend as an appraiser that would up the price just to get their friend a little more than it's worth. Hope this answers your question.
Web Reference:  http://www.vanessaboone.com
0 votes
Maria Morton, Agent, Kansas City, MO
Mon Sep 29, 2008
Wendy, we have a Six (6) Year Supply of Million Dollar homes in Kansas City. I realize this is not California but the point is: ask your parent's agent to run the numbers to determine the average Days On Market for homes in that area and price range. Also ask about the inventory supply. S/he can tell you the answers for that area.

Can your parents afford to wait? If so, yes, be patient.. If not, ask the realtor what they see as the viable options.
Web Reference:  http://www.mariatmorton.com/
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Jackie Rankin, Agent, Fort Worth, TX
Mon Sep 29, 2008
Wendy,

Well the good thing is that it sounds like the values are holding stable. What does your agent state as far as days on market.? What is the average? Are you still within that average amount of time? Are there any issues with the home which could be causing it not to sell (ie: maintenance, location, etc.?) Ask your agent for a list of the showing appointments. How many times has it showed before you reduced the price vs. how many times after? You want to gather as much information as possible so that you can make sure that you are doing everything possible to be competitive. It sounds like your price is competitive so that is good. And yes PATIENCE is always needed when dealing with real estate!! :) Hang in there!!
0 votes
wendy, Both Buyer And Seller, Simi Valley, CA
Mon Sep 29, 2008
ANSWERING

Thank you Jackie. The comps in the area still support the $1 million'ish price tag but the homes are on the market for months and months before being shown as sold. My parent's house has been on the market since the middle of June and "sold" within the first 3 weeks of being listed, then fell out of escrow (buyer backed out). My parents need to sell (can't keep up with the upkeep & property taxes) due to illness and will be moving to AZ to retire and they've been reducing the price of the house drastically the past few months. According to the comps in their area their home is below the average list price. Patience is probably just needed in this situation?
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Bill Eckler, Agent, Venice, FL
Mon Sep 29, 2008
Wendy,

This is, in effect, what is intended to happen when an agent does a CMA prior to listing a property but two factors get in the way of providing homes that are accurately priced according to the current real estate market.

1. changing market- in a rapidly changing market, as prices drop it is very difficult for agents to keep up with the changes.

2. resistant sellers- sellers hold the hammar and resist pricing their homes below what they want to sell the home for and realtors too often give in to the sellers damands.

More and more people in today's market that a serious sellers are having appraisals done before listing their property. The benefit is being able to advertise selling below a current appraisal price and knowing there are where they need to be to stand a chance of selling. Our most recent appraisal prior to listing cost $350. Thus, the reason more people do not do pre-listing appraisals.

Hope this is helpful,

The "Eckler team"

Michael Saunders & Company
billeckler@michaelsaunders.com
941-408-5363
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Jackie Rankin, Agent, Fort Worth, TX
Mon Sep 29, 2008
Wendy,

You actually have several problems that you are dealing with: firstly, you have a property that has a value that is unique. Your typical buyer does not purchase in the $1 million range! :) Secondly, you have properties that were listed at $1 million now dropping to $800-$900 thousand. So is your market declining? Ask your agent to run comps again. Something is changing in your area and you need to know what it is. Are values dropping? What is the average days on market for this type of property in your area? Is that number changing as well? Ask your agent. These are all questions that he/she should be able to answer and should be addressing as your property remains on the market. Good luck!!
0 votes
wendy, Both Buyer And Seller, Simi Valley, CA
Mon Sep 29, 2008
ADDITIONAL QUESTION:

The reason for the question is that I'm seeing homes in a particular price range $1 million range that aren't selling (my parent's house as an example) and that have been on the market for months, then I'll see the price drop to maybe the high 800k's or low 900k's. They were first listed for $1 million because the "comps" in the area supported that price, but for whatever reason they aren't selling, so wouldn't an appraisal be helpful in this situation? Or am I just being too drastic?
0 votes
Jackie Rankin, Agent, Fort Worth, TX
Mon Sep 29, 2008
A seller can have an appraisal done, however this appraisal will not be sufficient for the buyers mortgage company. They will order another one which may or may not back up the one you have in your possession. An appraisal is an opinion of value for the day that it was done, no more no less. IE: 2 months from the day of the appraisal the value of your home may have changed. A good, experienced real estate agent can provide you with comps that will show you what homes are selling for in your area. If your agent has not done so, please ask them to. It is one of the first steps that I take when listing a home. As Jeff stated, if a client wants to list their home for more than what the comps support then I won't take the listing. I'd rather tell you the truth now, than have you mad at me later when it doesn't sell. Your Realtor should be helping you to price your home realistically! Good luck!!
0 votes
Bruce Lynn, Agent, Coppell, TX
Mon Sep 29, 2008
You can and some people do it. Most people don't do it because of the expense. The same thing with an inspection. I have had customer before do a presale inspection and fix all items before they list. That way no surprises.
Web Reference:  http://www.teamlynn.com
0 votes
Jeff Poleet, , Little Rock, AR
Mon Sep 29, 2008
In short, most seller's don't want to pay the cost. A good agent can give you a market analysis or Broker's Price Opinion (BPO) and it doesn't cost $500 bucks. (Believe it or not, good agents can actually save you money) If your house is overpriced, I am not going to list it because it will cost me money to market it, and in the end it won't sell. Guess who your mad at then? :)

It is very rare, at least in my experience as an agent, to NOT have a property appraise for the contract price. I know ahead of time if there is going to be an appraisal problem because when I view the home with a client I can tell immediately whether or not they are overpriced in given market. Baring some latent defect the house will appraise.

If it doesn't appraise then a savy agent will go back to the table (armed with an appraisal) and work out a reduction in price. A low appraisal is not necessarily a deal breaker.

Hope I was some help.
0 votes
stephen stri…, Agent, Nashville, TN
Mon Sep 29, 2008
Great question. I am seeing lately though that people are getting appraisals more before they list. Other than the fact that a whole deal can fall through based on an overpriced home, it puts todays market in perspective for the seller. A lot of families believe their home is worth more than what it really is. People are shocked that their homes have not only stayed the same in value but actually lost value in some cases. Getting a home appraised before a listing can even help the seller determine whether or not now is the time to sell.
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Scott Godzyk, Agent, Manchester, NH
Mon Sep 29, 2008
in most cases it is, it is called a brokers price oppinion and is the same aspects of an appraisal and gives you what todays value is. a good listing agent will explain what the average sales price is, what similar properties are slling for, what they think you should ask for your home and what they think you will get for your home. if this is not being done, simply you need a new agent who is experienced in listing homes and working on the sellers behalf to get the best price in the quickest possible time. hope this helps.
Web Reference:  http://www.ScottSellsNH.com
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