Does having a home “preappraised” or “preinspected” make a difference? Is this money well spent by the average seller?
Do buyers and buyer agents care, or are “prelisting” appraisals and inspections not considered credible?
Home inspector image via Shutterstock.
Should a seller-provided appraisal be accepted as impartial by a buyer?
What is your natural reaction to being told something is worth X? Do you say to yourself, “It might be worth that to you?”
A few things immediately come to mind when a seller-provided appraisal is pushed front and center:
- What is the relationship of the agent to the appraiser? Seller to the appraiser?
- What was the stated purpose of the appraisal?
- What is the background of the appraiser?
- When was the appraisal completed and what are the trends in the area?
- Who paid the appraiser?
- Was the appraisal completed as an underwriter would expect?
It’s interesting how frequently prelisting appraisals are above list price: “Appraised at $450,000 and reduced to $380,000.”
It’s reduced because the market — buyers — don’t agree. Saying it appraised higher is idiotic. The market indicates value.
There isn’t an appraiser on Earth who can pinpoint what a home might sell for when listed. At best they can offer a value range.
But shouldn’t this be something that a competent agent can do as well?
Are agents bringing in appraisers as a crutch — perhaps because they don’t want to offend a seller and lose a listing? In the so-called “recovering” market, are listing agents afraid to level with buyers who are convinced values have increased?
Clearly there are times to bring an appraiser in — if a home is truly unique, or the listing agent is genuinely stymied, for example — but those occasions should be infrequent.
Prelisting inspections are also a debatable call for sellers, though not nearly as much as appraisals.
At least half of any report is obvious. Homes constantly need maintenance, and every home will benefit from cleaning gutters, controlling surface water and changing filters. Is an inspector needed for that?
But unless it’s obvious, who is to say that repainting, a new roof, or major mechanicals are needed? A prelisting inspection will outline repairs that enhance appeal. But is a buyer looking at a stained and weathered roof going to rest easy because the seller pulls out a report that says it’s fine?
Appraisals and inspections are opinions. Buyers are finally getting smart and don’t want to be told what to think based on something provided by the seller.
Is there a role and use for both of these real estate professionals? Yes. But more as aids during the listing; buyers and lenders want “their experts” to offer opinions, not the seller’s.
Appraisers may serve as consultants during the selling process, working with sellers and agents to establish a list price, advising them on pricing strategies while the property is listed, and preparing an information packet for the buyer’s appraiser, for example.
Inspectors can play an effective role by detailing the less obvious issues and working with the seller to evaluate the buyer’s inspection report.
Sellers can save money by making obvious repairs and by using experienced agents who can look at the data like an appraiser.
If required, bring in experts and use them as the situation dictates. “If” is the operative word.
Hank Miller is an associate broker and certified appraiser in Atlanta, Ga. The lead agent for HMT Atlanta, he’s known for his candid opinions and real estate expertise.