Question: Is it wise to have your home professionally appraised before speaking to an listing agent? I asked my banker for the name of an appraiser as a reference, and they suggested an appraiser they use for loan purposes. I was wondering if I could get closer to an asking price, rather than following a suggestion from a real estate agent? – Edouard G.
Answer: Approach your question with a “range of value” in mind, which means the best price you can expect and the lowest price you should expect. When you speak with multiple realtors as part of the process of selecting an agent for you and your situation, each will provide their opinion on the value of your home, and in most cases, each opinion will be different. Learn more about value at dearmonty.com/determining-a-homes-value.
Some sellers want to price their house so that it is the next one for sale in the neighborhood because they are in a hurry; others want to test the market and try not to leave money on the table.
The three-agent solution
Ask three agents for a written estimate of the value of your property. Look at their comparable sales and fits, then ask questions and challenge their conclusions. Use the mid-range and mid-range highs of each agent to provide you with a range of values. Equally important, using this approach allows you to assess their work before hiring one.
The trick to finding the right agents is that it takes some work on your part. This is no wonder because a big part of training realtors is knowing how to prospect and how to convert leads into clients. Many real estate agents are conversion experts but subsequently fail as the deal progresses.
“They seemed to be such a nice person”
It is a mistake to interview only one agent. National Association of Realtors (NAR) surveys show that about 70 percent of home sellers interview only one agent. Our results suggest that a significant percentage of new listings in the market expire unsold with the original listing agent. Expiration rates for new listings are noticeable even in healthy markets. Even the hottest markets will have ads that expire unsold.
There are a variety of reasons why ads expire unsold. Having multiple reviews is more work, but it reduces your risk. Here are some of the reasons:
1. The agent wants the list. The sellers want an unrealistic price. Fearing that the seller will shoot the courier (which often happens), the agent accepts the seller’s high price, while thinking, let the market wear them down.
2. The officer misjudged the house. Agents tend to be optimistic. They can get emotional about a property, just like a prospect can. When this situation arises, the agent will make an effort to defend their belief, which is not in the best interest of the seller.
3. When agents have a relationship with the owner, it can influence or bias them. They are friends and they want the best for them.
4. The agent tells the seller the truth, but the seller doesn’t want it. The seller insists on the higher price and the agent gives in. The agent knows that three weeks later, with no action and the initial price talk still in mind, the seller could see the light. If the agent initially works, he loses the opportunity.
Get expert advice, then decide
When determining the value of a home, why do some buyers and sellers often abdicate responsibility for the appraisal? Perhaps this is because many homeowners don’t know enough about valuation techniques to question the details. Another reason could be that the home seller finds valuation theory and calculations too difficult to learn. For most people, learning the basics is not difficult. Learn more about difficult assessments here at dearmonty.com/challenge-real-estate-appraiser/
When you sell a house
Gather home value information before listing your home or buying a home by attending open houses for a similar property in the neighborhood. A secondary benefit of this activity is observing officers at work. By gathering open house data, your experience helps you learn about the right comparables. This knowledge will add confidence to your review of the expert’s opinions.
Finally, an appraisal is only a person’s valued opinion. A single opinion is an important reason why a home seller should interview multiple agents, and a reason to familiarize yourself with the key elements of an appraisal document.
Richard Montgomery offers real estate advice to readers. He is a real estate industry veteran who has championed reform of the industry for over a quarter of a century. You can ask him questions on DearMonty.com.