It's an understatement to say that the last 18-24 months of the real estate market has been a whirlwind. Culminating in almost complete insanity in Spring 2022 (read: listings selling for 20%+ over asking with no contingencies in one of the most extreme Seller's Markets most agents and consumers have ever seen). Even during the most extreme market conditions, we were telling our sellers that pricing was important: if you priced a home based on the comparable sales (instead of based on what you think you might get for it in multiple offers), you had your best chance of getting the largest return, hence making the most money.
However, as the market began to shift, pricing became even more important, and now: it's crucial to your success as a seller. Why? Because buyers have not only become less desperate to find something to buy, they've become more discerning, they know they have more choices, and they have become nervous in the uncertain conditions of our economy.
There are a few things you can do as a seller to still have your best chance at maximizing your profits and squeezing every last bit of equity out of your home, especially if you plan to see between now and the start of 2023.
TAKE A HARD LOOK AT YOUR HOME'S CONDITION
Over the last 12 months, a seller had a really good chance of being able to sell their home "as-is," making no repairs or modifications for the buyer and possibly even receiving an offer with no inspection clause or contingency. That has mostly ended, and buyers are regaining some of their negotiation power with regard to the initial contract negotiation, price, and inspection contingencies.
When preparing to list your home, take a look at any repair items you've been meaning to complete or that you know are needed and get them done, before you list. Buyers will see incomplete repairs as red flags that you haven't properly cared for your home, and they may even jump to the conclusion that there are more latent defects they can't see. Make a list of repairs that need to be done -- including any improvements you've been putting off -- and make sure to complete them before you put your house on the market.
HIRE A REALTOR® WHO GOES OVER COMPARABLE SALES WITH YOU, IN DETAIL
There is no silver bullet when it comes to pricing a home; it's not an exact science. A good REALTOR® will pull the recent closed sales; a great REALTOR® will go over them with you, in detail and with full transparency. When I list a home, I want my sellers to see what I'm seeing -- the homes that are most comparable to theirs, complete with listing photos and details -- and I want them to ask any questions they have. Oftentimes, the question that comes up is whether we can list higher than the comparable sales show. Usually, that's not a good idea; however, there's a good way to get a third party opinion on this...
GET A PRE-LISTING or CONSULTATION APPRAISAL
A pre-listing appraisal may be the best $500 you can spend as a seller. Not only does the appraiser not stand to make money based on the price of your home (unlike you and your real estate agent, whose profits are both tied to the pricing), but he has no interest, monetary or otherwise, in whether you get the price you want. When our clients agree to a pre-listing appraisal, they know that we work directly with the appraiser to determine the market value of your home. Then, we can use that appraisal value in our marketing to show buyers and their agents that we have put in extra effort to be sure that your home is priced properly.
While I know most sellers are trying to spend as little money as possible, stay with me here and let me show you a few reasons this may be a smart move for you.
- When there are very few (or no) comparable sales. With the low inventory issues that have plagued many markets across the U.S. in the last 12-24 months, there may not be homes that are truly comparable to yours -- in age, style, level of upgrades, etc. When this is the case and we cannot find good comps in the Multiple Listing Service (MLS), a pre-listing appraisal brings in a third party, the appraiser, and we can all put our heads together to see where your home fits in the market.
- When your home is unlike any others. Perhaps your home is unique or you have added many upgrades that simply are not reflected in any of the nearby recent sales, or maybe your home is on an unusually large (for the area) piece of land or there are a lot of nearby sales but none of them are anything like yours, you may want to consider a pre-listing appraisal.
- When we need to give buyers more confidence in your home's value. It may be that your home really is worth more than any other recent sale in your neighborhood or area -- you know it, I know it, but we may need some extra help convincing potential buyers. Furthermore, if your home has been previously listed and hasn't sold, getting a pre-listing appraisal shows buyers that there is value for them at your current asking price.
One more good thing to know about a pre-listing appraisal: if you use the right company to do the appraisal, they will go to bat for you once you are under contract. Most buyers who are obtaining mortgage financing will be required to pay for their lender to obtain an appraisal on the house. While they cannot use the pre-listing appraisal that you already have on-hand, in the event that the lender's appraisal comes up short of the contract price, the appraiser who did the pre-listing appraisal will assist with the rebuttal to the lender and their appraiser to help defend the value of your home. The company we recommend for pre-listing appraisals offers this service, and I advise only obtaining a pre-listing appraisal from a company who backs their valuations in this way.
Are you thinking of selling your home? Do you have more questions about how the pre-listing appraisal process works or about the selling process overall? Contact us today at 404-994-2181 or via the Contact Us form on this site. We would love to talk to you today about how we can help!
