BUYERS: 5 Questions to Ask Yourself Before Getting an Appraisal

5 questions you must ask yourself before getting an appraisal

October 25, 2013 By Tom Horn  Birmingham Appraisal blog

I had a reader email me a question last week asking why they should get an appraisal on their home, and I want to share with you the answer I gave them with the hope that it can help you make a similar decision. This person asked me “Why do I need to get an appraisal, I don’t want to have to pay for one”? In their particular situation a family member had died and left a home to the family. They wanted to sell it and needed to know what to ask. Some situations require you to get an appraisal such as when you buy or refinance a home, and you usually do not have a say so in the decision, however there are other times when you can make the decision yourself.

I told the person to ask themselves these 5 questions to help them.

1. Do I have access to a recent appraisal? The owner may have had a recent appraisal done on the home that could be used, such as with a refinance or a recent purchase. A recent appraisal can give you a good estimate of value if the real estate market hasn’t changed much since it was done, and if this is the case I wouldn’t recommend getting a new one.
2. Can I get information on home sales in my neighborhood, and if so are the homes very similar to my house? Some neighborhoods are what we call cookie cutters, meaning that they are all very similar in age, style, size, and appeal. If this is the case, and there have been recent sales and some current listings, then you may be able to estimate the value on you own. You can read more about doing this on a past post I wrote.
3. If I get an appraisal will the cost be offset by the money saved? I recently did an appraisal on a home a person was buying. They were not getting a loan from a bank so they did not have to get the appraisal, however they wanted to know if they were paying the right price. The appraisal value came in approximately $15,000 lower than the contract amount! The cost of an appraisal varies across the country, but in the Birmingham, Alabama area the average is about $350-$450 for a typical house. Would you pay this to save $15,000?
4. If I don’t get an appraisal will it prevent me from selling my home in a reasonable amount of time? This is related to #3 because it compares the additional cost you may have to pay if you don’t get an appraisal. By asking yourself this question you take into consideration the cost of holding on to the house for an extended period of time. If you price your home too high, and it takes 4 months longer to sell than if you had priced it more competitively with the market, then this additional cost must be weighed against the cost of the appraisal. If your mortgage payment is $1,000 then this additional cost would be $4,000, which would be about 10 times the cost of the  appraisal we discussed previously. You need to determine if this is a good return on your investment.
5. Am I committed to actually using the appraisal? Some people get an appraisal but will not use the value estimate to set a list price because they don’t like the value. Sounds crazy, huh? Why pay for an appraisal if you’re not going to use it? People allow their emotions to take over and ignore the value arrived at by a professional and unbiased appraiser. The appraiser is trained to be unbiased and provide a report that reflects the local market. If used correctly the appraisal will help you price your home to the market so it sells in a reasonable amount of time for the what the market will support.

If you have read through these five questions and decided that an appraisal can help you sell your home, please give me a call. I can answer any other questions you may have-no strings attached. I am committed to helping homeowners sell their home by pricing it properly and look forward to speaking with you.

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