Issue Date: November 9, 2005

Note to Sellers: Appraisals are not Gospel

By Jody Zink
Licensed Realtor in Ohio & Michigan

When Realtors meet with a seller to list a home, it's common for the seller to have a price already in mind. Sometimes that number comes from an appraisal report.

A report that might be out of date, inaccurate or even inflated.

Regardless of its purpose, once a homeowner hears a figure for their home, often it's all they want to hear. Especially if the number is higher than they expected.

Appraisals are estimates of value. When pricing a home for sale, the number you want is fair market value. That’s a reasonable price a buyer will pay and a seller will accept on the open market. Comparing prices of other similar sold properties in the neighborhood is one way to arrive at this estimate.

The purpose for the appraisal is essential. There are many reasons to get one. Maybe you’re obtaining a loan or refinancing. Perhaps you’re settling an estate or need to find replacement cost for insurance. Or maybe you’ve decided to sell your home and need to determine a price. Different reasons could potentially bring different numbers. I recently went to list a single family home and the owner insisted on pricing it at $160,000. Why that number? Because an appraisal was done 2 years ago to refinance. The home was all brick, meticulously maintained, 4 bedrooms, 1 bath with a huge yard and garage. It already had been for sale by owner at that price for more than 5 months. No offers.

The seller consulted me. I ran a comparative market analysis. I found nothing on his street that sold for more than $145,000 in over a year. Not to mention other comparables each had additional half baths and other amenities; two, the market changed since those homes sold 15 months ago; and three, the owner’s appraisal is outdated.

Based on the current market, the location and square footage of this home, I suggested we price the home at $130,000, at the most.

This, of course is just my opinion. Do I risk upsetting the homeowner and explain this? A good Realtor would. (Just my opinion.) It’s human nature to want to believe the higher number. After all, it’s right there on the appraisal. Practically written in stone. The owner holds the report in front of him fiercely pointing to the number with passion.

If we could realistically get that price, we both stand to gain! But not all sellers are realistic. The fact a seller needs more money, unfortunately doesn’t affect the value of his home.

In this seller’s opinion, he believes his home is worth $160K. It’s just that. An opinion. Some will agree with it--maybe even another Realtor. Let’s not lose site of the goal though: It’s the opinion of the buyer that matters most.

My advice: Have a fresh appraisal with homes that actually compare to yours before falling in love with an opinion.

Jody Zink is a licensed REALTOR in Ohio and Michigan with the Loss Realty Group. Her column appears every other week in the Toledo Free Press. She can be reached at jody@jodyzinkrealtor.com or 419-725-1881.