How an Appraisal Helps When Selling Your Home Without an Agent
You don’t always need a real estate agent to sell your house. Selling your home as “For Sale By Owner” (FSBO) allows you to maintain full control over the selling process and save on agent commissions.
However, having full control also means having a few more responsibilities, like finding the right selling price and negotiating with buyers. This is why many sellers in this situation choose to get their home appraised when entering the selling process on their own.
Let’s discuss how getting a professional appraisal can simplify the FSBO process, provide a reliable foundation for setting the right selling price, and give you the confidence to handle negotiations with buyers.
Understanding home appraisals
A home appraisal is a professional assessment of a property's value conducted by a licensed appraiser qualified by the IRS. The appraiser considers various factors, including the home's condition, location, and recent sales of local comparable properties, to determine its market value.
Appraisals ensure that the valuation of your home is based on concrete data rather than estimates or assumptions and are typically required when buying or refinancing a home. They can also ensure that the homebuyer and lender are both protected in a house sale.
Appraisers evaluate a variety of factors in their valuation, including:
- Location
- Condition
- Size
- Plumbing and electrical systems
- Home updates
- Safety features
- Nearby sales
- House material
- Amenities (indoor and outdoor)
The appraisal process can take one to three hours and at least two weeks to receive the report.
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Benefits of getting an appraisal for an FSBO
While hiring a real estate agent provides expertise in pricing and market conditions, an appraisal offers FSBO sellers a similar advantage without the need for an agent. Let's take a look at some of the main advantages of getting your home appraised in the FSBO process.
Setting the right price
A study by the National Association of REALTORS revealed that 15% of FSBO sellers in 2023 found setting the right price to be the most difficult task of the process.
A professional appraiser delivers an unbiased assessment of your property’s value and a detailed report based on current market conditions, comparable sales, and specific features of your home. This evidence gives you and potential buyers confidence that you’re selling your house at the right price based on accurate, data-driven insights.
Basically, an appraisal takes much of the guesswork out of the equation and helps ensure that you price your home appropriately and avoid common pitfalls like overpricing, which can drive buyers away, or underpricing, which can leave money on the table.
Enhancing credibility with buyers
When selling FSBO, you might face skepticism from potential buyers who question the value of your home or the accuracy of your pricing. A professional appraisal provides a third-party validation of your asking price.
By providing a copy of the appraisal report to interested buyers, you can demonstrate that your pricing is based on a thorough, objective analysis rather than just personal opinion. This can enhance your credibility and build trust with prospective buyers.
Streamlining the negotiation process
In negotiations, having an appraisal on hand can be a powerful tool. If a buyer's offer comes in below your asking price, you can refer to the appraisal to support your asking price and justify your position.
Conversely, if a buyer requests a reduction, the appraisal can help you evaluate whether the request is reasonable or if the buyer's offer is more aligned with market expectations.
Avoiding issues with the buyer’s lender
Buyers often rely on financing to purchase a home, and lenders typically require an appraisal to ensure the property's value justifies the loan amount. If a buyer’s lender orders an appraisal, and it comes in lower than your asking price, it can complicate the sale.
By proactively obtaining your own appraisal, you can address potential issues before they arise, reducing the risk of last-minute surprises and delays in closing.
Providing insight for improvements
An appraisal can also offer valuable insights into areas of your home that may need improvement or repair. The appraiser’s report will highlight aspects that could enhance the property's value or address deficiencies that may negatively impact the selling price.
This information allows you to make informed decisions about what improvements to prioritize, potentially increasing the appeal and market value of your home.
So, should you get an appraisal for an FSBO?
Ultimately, an appraisal can be a strategic tool that aids in a smoother and more successful home sale. If you’re considering selling your home FSBO, investing in an appraisal could be a wise step toward achieving your selling goals effectively.
By obtaining an objective valuation of your home, you’ll be better equipped to make informed decisions, avoid pricing mistakes, and increase the likelihood of a successful sale — all without the need for a real estate agent.
