Selling own home-appraisal necessary?

[Silverfall]

Originally Posted by newenglandgirl

That's what my attorney says but there seems to be a huge consensus to do one. Can you explain your position further? Thanks.

Well most sellers, and hopefully you too, have interviewed at least three real estate agents. You should have in front of you three listing price recommendations (hopefully within 5% of each other) and three marketing plans. If you don't...go interview more agents.

The reason sellers don't often pay for appraisals is because they are expensive and they don't help you with the buyer. Typically they look at the comps that the agent pulls, and hopefully they used comps and not just random houses, and since they have three opinions they tend to go with that. Because the seller paid for the appraisal the buyer will often view it as biased toward the seller and disregard the accuracy of it. The buyer's lender won't accept it so most sellers view it as wasted money. So, then it really becomes a tool about the marketing of your home.

Appraisals, like real estate agent CMA's, will vary from appraiser to appraiser. What you'd really need, IMO, to make it an effective listing tool is to have three of them. I've seen them swing by $50,000. It isn't the end all be all tool. It is just one of many important tools during the real estate process.

I personally think that doing a presale home inspection and getting repairs done is a much better use of a seller's money. In my 7 years as an agent, I have had one seller get a presale appraisal. He shared it with me after I did my CMA. I recommended a sales price 2% higher than the appraised value having not seen it, so the appraiser and I were close in opinion.

Brandon Hoffman wrote on another thread that about 10% of agents are exceptional at pricing homes, 40% adequate, going down from there. I agree with that. Try and find one of those 10% if you can.

[SmartMoney]

I won't go into my rant about how setting your asking price too high in the beginning (with intent of scheduled decreases in list price) will cost you far more in the long run than pricing the home correctly from the beginning. That is Real Estate 101.

Homeowners that do a FSBO because they lack the funds to pay a commission are trying to avoid a short sale are courting disaster. The stat is very close to 100% of these sellers eventually wind up selling by short sale, anyway, but at greater expense and debt accumulation (preparing home for sale). Some even have their home on the market for ages - living in suspense, just waiting for something to happen.

Know your motives for selling FSBO. You didn't share why and that's your business. But at least explore worse case senarios and decide what is acceptable to you before you put your home on the market.

[Greeenback]

The term "comp" is still being interpreted the wrong way. Real Estate Value is complex. "Comparable" is more complex than just, "pulling comps." Realtors do not comprehend it, because they do not make their living studying Real Estate -- Realtors make a living being a sales person. Anyone can say, 'just pull the comps.' There is more to it than just saying, "pull the comps."

A CMA (and BPO) has no business being mentioned in the same breath of an Appraisal.

Five Independent Real Estate Appraisers will come in within 5% of each other. Three Independent Real Estate Appraisers and Two Real Estate Appraisers, will come within 5% of each other, except for the Two Real Estate Appraisers who are not independent. Competency is included under "Independent." Value Estimate: it is what it is.

An Appraisal is more than just an estimate. The reason why sellers and buyers do not acquire an Appraisal, is because they are sold otherwise. The general public (but not all) is not educated on what an Appraisal can do for them, and society as a whole. Like a Lawyer studies law, an Independent Real Estate Appraiser studies Real Estate.

When a seller has an Appraisal in their hands, they will know exactly what they want and exactly what they need. They can tell their Realtor exactly what they want and what they need. The seller contracts with a listing agent to do two things: market the property and find a buyer who is willing to meet the seller's terms (within the context of advocacy). The Appraisal/Appraiser assists the seller in determining the terms of a sale price for the proposed transaction.

The two professionals are completely different. It does not matter to a Real Estate Appraiser if an individual decides to use a Realtor in order to market the property and find a buyer that is willing to meet the seller's terms. It does not matter, because they do not compete with Realtors. However; It is unfortunate that society allows other professionals to pretend they are something in which they are not, and then sell it back to them. The biggest lies in Real Estate: There is no Independent Real Estate Appraiser, and an Appraisal is merely a number.

[manderly6]

Greenback - so let's say a seller get an appraisal from an independent real estate appraisal. Now what? You can almost guarantee the buyers are not getting appraisals during the offer stage. They are most likely going to go with some sort of "pulling comps" method.

If the independent appraisal is a higher value than "pulling compes" what chance do they really have of getting the higher number from the buyer. Assuming there is a decent amount of inventory they would just treat it like one more over priced home and move on to the next one.

If the independent appraisal is a lower value why would they even care about it. They are going to try and get the highest amount possible from the buyer. And they are going to think about how the buyer is coming up with the number.

If the appraisal is about the same then there isn't much value at all.

[Greeenback]

Originally Posted by manderly6

Greenback - so let's say a seller get an appraisal from an independent real estate appraisal. Now what? You can almost guarantee the buyers are not getting appraisals during the offer stage. They are most likely going to go with some sort of "pulling comps" method.

That is correct. The consideration, which is monetary, is always in the mind of the buyer. They will eventually find some type of method to figure out what the property is worth to them. This is typical behavior.

If the independent appraisal is a higher value than "pulling compes" what chance do they really have of getting the higher number from the buyer. Assuming there is a decent amount of inventory they would just treat it like one more over priced home and move on to the next one.

More supply than demand, I believe you are referring to. There are several baskets of consumers. There are several types of values, as well. The buyer in the above scenario may not be looking for Market Value. he/She, may be looking for "disposition value." An Exposure Time for both Market Value and Disposition Value can be estimated. Both type of values attracts different baskets of consumers. An analysis of "Exposure Time" will give an indication of how long the property may need to be exposed to the market to reach a particular basket of consumers. However; your assumption is correct, as you are describing the mechanism of supply and demand. The consumer can find substitute properties quit easily with an over supplied market, even though they are looking for market value.

The estimate is given as of an effective date. Therefore; The estimate will reflect that particular date, and the principle of change is in effect. The Independent Appraiser will interpret market conditions, and show how change will affect market value, which will give the seller an indication of what to expect as time passes, while their asset is being exposed. This will give the seller knowledge and insight into their decisions; from here, they can adjust the terms of a proposed sales price -- reason with the market. Time is analyzed.

Edit to Add: Depreciation will be measured...(the past and present is analyzed). Understanding the affects from accrued depreciation will help reason with time, and assist with feasibility issues.

If the independent appraisal is a lower value why would they even care about it. They are going to try and get the highest amount possible from the buyer. And they are going to think about how the buyer is coming up with the number.

The opinion of value is more significant than the estimate itself. Once the seller receives the Appraisal, he/she can make an informed decision. What the seller should be concerned about it is 'why is the value low.' What can the seller do to maximize value of the asset, to meet demand, without losing monies and equity?

Asset management - Due process of maximizing value to a property or portfolio of a property from acquisition to disposition within the intended use defined by the client; that which includes the analyses of the positioning of the property in the market place in accordance with Land Economics

The Appraisal can indicate why the value is lower. And, what may be done to maximize value. Then a feasibility analysis can be performed.

If the seller doesn't take this into consideration or a similar, then their property may very well sit on the market, for their self interest, desires a higher value than what demand expects from the supply.

Again, there are baskets of consumers. The Appraisal can also communicate how long it may take to reach a buyer who will pay over Market Value for the property. Opportunity costs comes into play. The seller can make an informed decision, whether the Appraisal is reported to have a low value or a high value according to the his/her interest.

If the appraisal is about the same then there isn't much value at all.

There is always value; whether there is more supply than demand, more demand than supply, and if supply and demand is close to equilibrium. The understanding of value and how it relates to the asset is what's important.

An Independent Real Estate Appraiser may want to come by and pick apart what I just said, and maybe argue a few points, and add something. This is Ok, with me; I welcome it. I expect an Independent Appraiser to do so.

Edit to Add: A knowledgeable buyer and seller, multiplied, is a cure.

[Brandon Hoffman]

So Grenback, what happens if the CMA and the appraisal come out being similar? BTW, I'll bet you 5 to 1 I can project a sales price in my market better than any appraiser.