How many times have you heard on a pre-listing interview, “I’ve just had my house appraised”, and just knew that you were in for an uphill climb? What most sellers don’t quite understand is that an appraisal does not necessarily tell the whole story of value. Appraisals are primarily used to determine market value given consistent market conditions. If a seller is looking to purchase insurance, apply for a home equity loan or have a tax assessment done then the appraisal can be a useful tool. However, when determining how a particular home may compete in unusual market conditions there is no better tool than the CMA, or Comparative Market Analysis.
In times of up, and more commonly now, down markets, to truly position a home to sell within a reasonable period of time one must illustrate to the seller how their property “stacks up” to the competition. An appraisal may yield a market value of $500,000, but in a market where there are dozens of $500,000 properties it is unrealistic to think that yours is going to sell quicker than similar offerings in your market. The only way this works is if the property you are marketing is truly a standout and offers tangible value over competing properties. Failing that, pricing the property under the appraised value will most likely yield the results the seller is looking for.
It is, therefore, incumbent on us real estate professionals to consistently deliver this message to our sellers. Too often I have found agents that will take the appraised value and use that as the listing price. Even more often this strategy fails and the owners are left with less than desirable results and a property that has become stale in the market.