Property Appraisals: And What to Make Of Them

Property appraisals – firstly, what are they? From my experience I have found that property appraisals are very often mistaken for property valuations. So before I go on I first want to clarify what the difference is. A property market appraisal is a real estate agents opinion of what a property is worth based on recent comparable sales surrounding your property. Property appraisals are almost always a free service. Since real estate agents have a financial interest in ensuring they maintain a relationship with you (as the seller), quite often their opinion can be effected by how they perceive you will interpret the estimated price of your property. A property valuation however is evaluated by a qualified valuer who has undertaken prescribed education and training in this field to ensure that they take into account all features and issues relating to a particular property. Valuing is a complex task and will take some time to complete. They must legally provide an estimated value based entirely on all the facts. They will not get involved with the emotional needs of the owner of the property. So, if you are getting a market appraisal by a real estate agent, it is best to keep in mind that they may play with the figures to keep you happy or alternatively, to condition you to sell… which is a big reason why there can be such a large variation in the prices. So how do you get a true indication of the value of your home without having to pay for a valuer? Here are some easy methods to help you uncover the true market value of your property:

1. Get a minimum of three market appraisals by various real estate agents that specialise in your area.
2. Ask each of the agents to show you their list to sell prices. A good agent with a proven track record will be happy to show you this. Alarm bells should ring if they can’t or won’t show you this. If they do, check their list to sell difference. If the majority of their sales end up selling for much less than they list for, dismiss the agent immediately. They will NOT  be able to help you achieve a premium price.
3. If you find one of the appraisal comes in very high, try not to get too excited (and trust me…it will be hard not to). A big price will make you feel really good and you will naturally feel pleased with the agent. Be warned though…if one agent is miles above the rest, there is a good chance that either they don’t know the market, or more likely…they are trying to ‘buy the business’ by telling you exactly what you hoped to hear. Listing your property too high is damaging to your property. I can almost guarantee you will end up selling for less than you could have.
4. If you find one of the prices comes in very low, don’t get too disappointed. There are a few reasons why this might happen. Firstly, the agent may not know your specific area very well. Alternatively, they may be attempting to get you “conditioned” so it is an easier sale. The most likely reason however is that unfortunately it may be the only agent that is confident enough to give you the brutal truth. Most agents will know that if they come in too low on price then you will not appoint them to sell their home. Try your best to not be insulted as this will be your natural instinct. Instead look at their track record in the area to assess what their knowledge is of comparable properties and what their sales prices are like. Of course you don’t want to under price your property…but the last thing you won’t to do is dismiss the only agent that told you the truth. Also note that just because this is the agent gives you an estimated selling price, does not mean they won’t be pushing to get a much higher price.
5. Do not listen to family, friends or neighbours, even if they have the best of intentions. They generally give inaccurate estimates.
6. Go to open houses that are in a similar price bracket in your area. Remember, don’t get too caught up in the ‘For Sale’ price tag, instead pay more attention to what they sell for. There is a big difference as there are many price reductions that you rarely hear about.
7. When you compare other homes to your property, try to remember that most owners are rather biased to their own property (myself included)…after all, you were the perfect buyer for the property. On average, you can safely take about 10% off where you percieve it to be.

At the end of the day, remember that an appraisal really is just one person’s opinion. Even a paid valuation can be dramatically different to your end sale price. With the right marketing, great presentation and a very strong negotiator…achieving a price that supersedes market value is not difficult. This is why it is so crucial to select a skilled agent. It will be the difference between tens of hundreds of thousands of dollars…so whatever you do, rather than focusing on finding the agent that gives you the best appraisal price, focus on picking the best agent as if you do, you can rest assured that you will get the best possible result in any given market.

If you’d like a market appraisal or  would like to discuss how to achieve a premium price for your property, phone me on 0424 006 855. I’d be delighted to assist you.