Selling your home is likely one of the biggest financial transactions you’ll make in your lifetime. It’s only natural that you’d want to get the best return for the time and money you’ve invested over the years.
One way to ensure you secure a good deal on your home is to get a pre-listing appraisal. It evaluates your home’s condition, as well as current market values for similar homes in your neighborhood.
Although most mortgage companies require an appraisal before buyers can close on a home, sellers have the option of getting an appraisal before listing their property on the market.
Here’s what a pre-listing appraisal involves and why you should consider one before selling your home.
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Set logical expectations
Although selling a home is a major financial transaction, it can also be emotional. We make memories in our homes, and those sentimental connections can influence your decision-making.
When you get an appraisal, you’ll receive an objective assessment of how much your home is worth. Instead of seeing the floor where your children took their first steps, an appraiser will notice that you have hardwood instead of laminate.
In some instances, an appraisal may make it clear whether you’re ready to part with your home. If your emotional connection is greater than a home’s appraised value, it may be better to delay selling. It’s difficult to make a level-headed business decision if your emotions are too strong.
Establish a realistic sale price
Whether you’re working with a real estate agent or listing your home for sale by owner, you’re ultimately responsible for all decisions. Unless you watch the housing market closely, you may not know if you’re listing your home for the right price. By getting a pre-listing appraisal, you’ll receive an unbiased evaluation of your home’s value, which can inform your decision-making.
Although an appraisal can tell you your home’s value, it may not indicate what people are willing to pay. Real estate market forecasts in 2022 predict a hot seller’s market, and buyers may be willing to pay well above a home’s appraised value to secure the house of their dreams.
Real estate agents can help you list your home at a price that solicits higher offers, and they can advise you about which offer to accept, but you have the final say.
Offer security in short sales
A pre-listing appraisal can be particularly helpful if you need to sell your home fast because you’re moving for a job or a family emergency.
For example, if you’re considering selling your home to a company that buys houses for cash, having an independent appraisal will tell you whether you’re getting a good deal. If the company’s offer is significantly lower than your appraised value, you may want to keep looking.
If you need to move quickly but don’t want to lose out on a good price for your home, some companies, such as Orchard, allow you to buy a new home before selling your first house without paying a second mortgage.
Prioritize last-minute repairs and updates
To get the best sale price, many homeowners think they need to remodel their kitchen or bathrooms before listing their homes. A pre-listing appraisal can help you decide whether the return on investment is worth the time and money or if it’s better to sell the property as-is.
Renovating a kitchen typically costs between $10,000 to $30,000 depending on the finishes you choose and labor prices in your area. If a contractor gives you a quote for $20,000, but an appraiser says the update will only add $15,000 to your home’s value, you’d actually be updating at a loss before the sale.
If you have serious concerns about your home’s condition and value, you may want to consider an inspection as well. While an appraisal determines a home’s value, an inspection can identify problems that may deter potential buyers. By comparing red flags from an inspection with the value assigned during appraisal, you can decide whether any major repairs are worth the upfront cost.
Select the best real estate agent
It’s a good idea to interview multiple real estate agents before hiring one to sell your home. Before signing a contract with an agent, ask yourself these questions: Do your personalities match? How well do you trust them? What kind of results can they produce?
As part of their pitching process, agents will give you a net sheet that tells you how much money you can expect to receive from your home sale. Agents determine this value by looking at comparable homes for sale in your market, how much you’ve invested in your home, and how much you still owe on your mortgage.
Values may vary from agent to agent. By getting a pre-listing appraisal, you can determine which agent has the most realistic plan and expectations for your home listing.
Avoid Unwanted Surprises from Mortgage Brokers
Most lenders require an appraisal before they’ll allow buyers to close on a home. To protect their investment, lenders want to ensure they’re not giving a buyer more money than the home is worth.
If an appraisal comes back significantly lower than the offer price, the mortgage company will likely only cover the appraised amount. Unless the buyer can cover the difference, the home sale may fall through, and you may need to re-list your home and start the selling process from scratch.
Getting a pre-listing appraisal can save you from being surprised after you accept an offer.
Article last modified on January 5, 2023. Published by Debt.com, LLC