When real estate agents conduct their listing presentations they should be able to explain to their client how they intend to price their home. One of the main reasons, if not the top reason, for homes languishing on the market and not selling is that the home is overpriced.
Encouraging your sellers to have their home professionally appraised when you make your listing presentation, you’ll arrive at an accurate listing price with a much better chance of selling the house sooner rather than later.
A number of negative consequences can result when a home is overpriced. If the home’s price doesn’t reflect fair market value, it may not get many showings. The seller’s excitement for having listed their home will soon turn into frustration if there isn’t any real activity. When a house isn’t being shown, it’s unlikely to sell.
If any offers do come in, they may seem way too low because the sellers are expecting to get close to their asking price. If this goes on too long your seller may wonder about your ability to sell their house. From your seller’s perspective, when too few offers come in and the ones that do are all low-ball offers, they have to wonder if the problem is you.
When a home is priced too high, buyers tend to form a negative opinion of it. They’ll soon figure out that it’s overpriced and perhaps start picking it apart, noticing every flaw. Other agents on the lookout for homes for their buyers may avoid showing yours until you drop the price. All this adds up to a home staying on the market for quite a long time. When you finally do drop the price the offers coming in may be lower than expected since your seller is now likely to be seen as desperate.
If somehow you do get a full price offer, or something close, you would still need to deal with the mortgage appraisal, unless you’re lucky enough to find an all cash buyer. Even if someone is willing to pay full price, they still need to get loan approval for the home. Situations like this occur occasionally if the buyer isn’t familiar with the neighborhood or if they fall so much in love with the house they lose perspective and agree to overpay, but they still have to get it past their lender.
Unfortunately, most buyers think that if the seller has priced their home high but they are willing to pay that price; there shouldn’t be a problem. But if the buyer needs financing, that can pose problems.
Whenever a homebuyer applies for a loan to buy a house, the financing company or bank will require an appraisal so they can be assured that the house is worth the amount of money they are lending for the purchase. If the appraisal shows that the house is not worth that much, then the loan won’t be approved and the deal will collapse unless the price is reduced to match the bank’s appraised value.
The Appraisal Will Reflect Fair Market Value
These situations can be entirely avoided if you price the home properly in the first place and it reflects fair market value. The price the home is listed for needs to reflect the prices other similar homes in the neighborhood have sold for recently. It should also be aligned with what the other homes are currently listed at.
If the comps you used in determining your price were from very similar homes that sold recently, then when the bank sends their appraiser out he or she will very likely use similar if not the same comps. This means the value they come up with will likely be very close to the price agreed to and the chances of the deal collapsing are lessened.
There are a lot of agents who wonder if paying for an appraisal makes sense, if it’s worth the cost. But when you think about how much money you would be spending on marketing the home while it’s overpriced, spending a fraction of that on an appraisal seems like the smarter way to go. Most of the San Diego real estate agents that we work with at Brandlin Appraisals have no problem getting their sellers to pay for their pre-listing appraisals once they know how important it is in getting their home sold in a reasonable period of time.
I invite you to pick up the phone and call me at Brandlin Appraisals for help with your pre-listing appraisal.
Please contact our office with any questions you may have or to schedule your appraisal appointment at 760-741-7699, firstname.lastname@example.org or use our contact page on our website.
Brandlin Appraisals Inc. specialize in helping people who need appraisals for estate purposes, divorce, date of death, bankruptcy, FSBO’s and more throughout San Diego county. For more information please contact us at (760)741-7699, or visit our website at Brandlinappraisals.com, or email us at email@example.com
San Diego, CA // Real Estate Appraiser
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