Homeowners go through many considerations when deciding whether or not to put their house on the market for sale. This is a difficult and stressful time for the homeowners due to the many issues considered when deciding to sell their dwelling. The items include how much the open market would be willing to pay for the home, current market conditions for comparable dwellings, current economic issues, how much time the home will be on the open market before it sells and also the choosing of a real estate agent.
There are situations when a homeowner wants an opinion of market value prior to deciding on a real estate agent and there are other situations in tough market conditions where a homeowner and their real estate agent are unable to determine an estimated listing price for the subject dwelling. These are two situations where a pre-listing appraisal can best serve the homeowner.
A pre-listing appraisal, when prepared by a qualified appraiser, will give the homeowner an unbiased estimate of market value for the homeowners dwelling. The appraiser will consider numerous factors when preparing the appraisal. These items include recent closed comparable sales, active and pending comparable listings, past and future marketing times, current economic conditions, the present condition of the subject dwelling including recent updates/improvements made to the dwelling and overall market appeal of the dwelling.
One additional factor that should be considered by the homeowner, the real estate agent and the appraiser is the typical sale-to-list-price ratio for comparable dwellings in the subject area. The sale-to-list-price ratio is the ratio between the listing price of the subject and the value the subject eventually sells for. For example, if the subject is listed for $225,000 and sells for $216,000, the sale-to-list-price ratio is 96%. The sale-to-list-price ratio is important because typically the pre-listing appraisal supplied to the homeowner will be an estimated market value for the subject dwelling. The homeowner and the real estate agent can then determine a list price based upon the typical sale-to-list-price ratio for comparable dwellings in the subject area. For example, if the estimated market value of the subject in the pre-listing appraisal is $245,000, then an estimated listing price based upon a 96% sale-to-list-price ratio would be approximately $255,210.
Once the appraiser has considered the above mentioned factors, the pre-listing appraisal will be prepared and delivered to the homeowner. The appraisal will typically be completed on a preprinted form, though other forms may be utilized in certain situations. The appraisal will include photos and a sketch of the subject dwelling, photos of the comparable sales and listings, and an analysis of the sales/listings utilized in the appraisal analysis.
In a situation where the homeowner wants to get an estimated market value prior to contacting a real estate agent or in a tough real estate market where a homeowner and their real estate agent are having difficulty determining a market value/listing price for the subject dwelling, a pre-listing appraisal can be a real asset to the decision making process. Please contact our office with any questions.