✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
The answer is a strong NO. A home appraisal favors only the home buyer. It costs anywhere between $450 and $1,200 and can negatively impact your home’s pricing.
A pre-sale home appraisal may force you to lower your asking price and ignore costs like seller concession, closing costs, etc. Moreover, buyers and their banks require independent appraisal reports for the mortgage process.
Instead of an appraisal, you should consider CMA reports or ‘Broker Price Opinion‘ for pricing strategies. If you still need help, Houzeo offers you pricing assistance with its Platinum package.
Who Needs a Home Appraisal More, a Seller or a Buyer?
Sellers don’t need a home appraisal as much as a loan company from the buyer’s side requires it. A mortgage company requires an appraisal to be able to decide the mortgage amount.
The mortgage amount depends on your house’s appraised value. And, this third-party appraisal ensures a profitable lending business for the loan company.
What Happens If I Get a Home Appraisal Before Selling My Home?
Chances are that a home appraisal may affect your asking price. Here are the impacts of appraisal on the price and the ways to take care of them:
- High Appraisal Value: When the appraisal value exceeds your listing price, you may be tempted to set a higher price. If you overprice your home it may result in fewer showings for your property. Price your home moderately higher and enjoy getting continual offers.
- Low Appraisal Value: A low appraisal can be a deal-killer. You may need to reduce your asking pricing and settle for less. But it’s not the end. If the difference is small, and you’re in a hot market, you can list your home higher than the appraised value.
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When and Why Should I Get an Appraisal Before Selling My House?
Here are some instances that may force you to get an appraisal before you sell your home:
- Unique Properties: Your property has some unique features like a huge swimming pool, a playground, solar panels, or it’s a heritage property. In such cases, it’s hard to arrive at a value or find comparable sales.
- Location: Your house is in a rural area. Consequently, there are very few similar properties and you can’t prepare a CMA or set a listing price.
- Inheritance: If you want to sell an inherited property, you may want to know the correct price through an appraisal.
- Mispricing: More than 70% of sellers overprice their home, while an average home spends 67 days on the market due to mispricing. If you’re unaware of how to price your house and disagree with the agent’s price, get an appraisal done.
- Divorce: If a divorce causes you to split the assets with your partner, you may have to evaluate your real estate assets. The partner who resides in the house has to decide the value of the settlement.
- Bankruptcy: If you’re filing for bankruptcy, you will have to sell your home and get a value determined as per the legalities.
How Much Does an Appraisal Cost?
A home appraisal cost of a 1,300 to 1,700 sq. ft. house is $400 on average. It may be as high as $1,300 to $1,400 for an estate or a bigger house.
Here is an average fee structure that can make you think again, ‘Should I get an appraisal before selling my house at this cost’:
| Appraisal Model | Costs | Method of Appraisal |
|---|---|---|
| Digital Appraisal | $75-$200 | The appraisers doesn’t enter the property. They digitally research on comparable sales and give an estimated value for a fee around $75 to $200. Banks may not accept a digital evaluation. |
| Drive-by Appraisal | $100-$150 | The appraiser will only check the exterior of your house. The lender companies will not accept it as a final value. |
| Hybrid | $250-$350 | It involves two parties. One party enters the house to measure and check its condition. They share this data with an appraiser who uses it along with comp sales and determines the appraised value. This costs around $250-$350. |
| Traditional Model | $375-$450. | This is the most accepted method as it provides an accurate value. It includes a complete onsite evaluation of the property. Since this is the most accurate and time-consuming, it costs the highest i.e., $375-$450. |
How Can I Set a Listing Price for My Home Without an Appraisal?
While a home appraisal may cost you anywhere from $300 to $1,000 and consume a lot of your time, here are two better options for you:
- Broker Price Opinion: A certified real estate broker estimates the house’s value. The broker inspects the house and calculates the BPO based on the home’s characteristics and the recent sales figures of comparable properties.
- Comparative Market Analysis: A detailed CMA report is more advantageous and sufficient to estimate the pre-listing value. It comparatively studies similar homes in your neighborhood and provides a fair market value for the property.
You can use the FMV value compared to an appraised value to set a listing a price. Whereas an appraised value helps a buyer get the mortgage loan.
What’s the Difference Between Home Appraisal and Inspection?
Both include an assessment of the house but serve different purposes. Here are some primary differences between a home inspection or an appraisal:
| Home Inspection | Home Appraisals | |
|---|---|---|
| Purpose | It determines the condition of the house | It calculates the value of the house |
| Authority | A home inspector performs it | The bank will appoint a third-party to appraise the home |
| Duration | It takes 24-48 hours | It takes 1-4 weeks |
| Outcome | It helps decide the correct price for a buyer | It decides a basis for the mortgage limit |
What’s the Difference Between Home Appraisal and CMA?
A Comparative Market Analysis report saves you time and money if you’re selling your house in 2024 and want to set a listing price:
| CMA | Home Appraisal | |
|---|---|---|
| Cost | Free/Nominal fee | $350-$600 |
| Duration | 1-3 days | 1-4 weeks |
| Authority | A Realtor/Real estate agent | A third-party must be hired |
| Applicability | Non-unique and accurately priced homes | Unique and hard-to-value homes |
The Bottom Line
A clear answer to whether ”should I get an appraisal before selling my house” is NO! Instead, rely on a CMA or a Broker Price Opinion to know the right price for your home.
Real estate agents prepare these reports but they charge hefty commissions on sales. If you want to save your money and get pricing assistance, list on the MLS.
You can count on Houzeo as we get your home on the MLS within 24 hours. You can also save thousands on appraisal fees and agent commissions. Our platinum package offers you CMA reports and vetted broker’s services only for a flat fee.
FAQs
How to find a home appraiser near me?
Finding a good appraiser is easier now. You can visit your local government’s home appraisal bureau or department for more information. Make sure the appraiser is certified, licensed by state, and has a good track record.
» Home appraisers near you: Check out the home appraisers on Houzeo
What to do before an appraisal?
You should prepare and clean your home before an appraisal. Never show an uncleaned house to the appraiser. Take enough time to make your home appraisal-ready. everything is functional in your property i.e. light bulbs, water connection, door locks, exterior lawn, etc.
Who pays for home appraisal costs, the buyer or the seller?
When a mortgage loan is involved, the lender hires the appraiser, and the buyer pays for the home appraisal costs.
This also means the homeowner pays for the appraisal when refinancing a mortgage.
If buyers are wan to purchase on cash, they don't need an appraisal.
How long does it take to get an appraisal report?
Once a buyer or a lender hires an appraiser, they visit the home within 48 hours. The initial home assessment doesn't take long. It takes the appraiser anywhere from 10 days to a month's time to deliver the appraisal report.
How to get my house appraised?
You should research the market and find a professional appraiser. You should also speak to your lenders or the loan agencies about the home appraisal process.
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