Independent Home Appraisals Are Beneficial
By DAVID LLOYD JONES
Two houses, one slightly larger than the other, went on the market a few years ago. They were across the street from each other.
One, a basically single story house, was made of an attractive gray stone that had a distinguished look. It was the smaller of the two by square footage but the difference wasn’t great.
It was a three-bedroom home until its owner moved in. A confirmed bachelor of middle years, he decided to turn it into a magnificent English mansion (on a reduced scale) and lavished every luxury he could afford, figuring he’d leave it up to his heirs to try to get the money back.
Down came the wallpaper. Up went oak paneling. Off went the linoleum flooring. Down went brick for that proper rural England feel. Carved wooden lions flanked the fireplace. Bookshelves embraced his ample collection. One bedroom was sacrificed to become a library and entertainment center. The second became an office.
The house across the street had no such updates. It did, however, have two teenage boys who helped keep it in a constant state of turmoil. It was not particularly attractively laid out, but it served its purpose well.
In due course our bachelor found a woman, soon had a child and another was imminent. Suddenly a one-bedroom house, no matter how richly appointed, was inadequate.
The family on the other side also decided to move. The bachelor put his on the market for $250,000. The family across the street wanted just under $200,000. The bachelor sold his in 10 days. The house across the street took three years. What happened?
Several things. For one thing, the bachelor got lucky. The buyer shared his tastes, but homes with the amenities he offered were usually far more expensive. To have the house of his and his wife’s dreams and an affordably reduced scale was a miracle. They had been looking for three years; now they were more than ready to strike.
The bachelor sold his house quickly – true – but he never began to realize a payback for all the money he had lavished on its renovation.
The family across the street forgot a simple rule of selling a house: Once you put your house on the market you are in direct competition with every house in the area selling in the same price range. All of which is a long-winded introduction to the question: Just how do you price your house?
It helps to get an outside opinion. Any real estate associate will run a comparative market analysis. He’ll see what houses have sold in an area in the recent past (rarely more than a year) and from that can extrapolate a general range of worth for a house. The best real estate associates will come awfully close to the right price the majority of the time, but there can be exceptions.
Take the above example; two houses built at approximately at the same time but one considerably updated and the other not – these are things you can’t ascertain from the street.
The seller, of course, has an attachment to his home. He must ruthlessly cast this aside. The would-be buyer is only going to see walls, a roof, a ceiling and a floor. It is a box that the buyer will modify to his own tastes and past history is unimportant.
All that money spent to bring the house up to your exacting
standards? Improvements made to the kitchen and bathrooms might bring back part of the costs but the rest will probably be a wash. Even that swimming pool you spent thousands putting in the back yard will have value only for the buyer who wants a pool. Those buyers not interested in buying a pool will look elsewhere.
“And don’t get too attached to square footage,” warns veteran appraiser Jimmy Ritchie. “People get fixated on the fact that a house nearby is selling for $80 a square foot, forgetting all square feet are not equal.”
Sellers should beware of the overly enthusiastic estimate. If you interview several real estate associates, and one says he’d list the house at a far higher price than anyone else, it would not be a bad idea to let a little healthy skepticism creep in. Some associates will tout a higher price than the market will sustain just to get the listing. Then, as the house languishes unbid upon and unloved, the homeowner will be cajoled into lowering the price of the house until it reaches a more realistic level.
This helps the real estate associate get a listing, but it penalizes the homeowner. Research shows that when a house goes on the market there is immediate interest in it that peaks in the first month. Then, all things being equal, the interest slides downhill until a substantial drop in price reignites it. It’s far better to be enticing from the get-go.
Appraisers cost money, but unlike the real estate associate vying to list a property, an appraiser has no rooting interest in the cost of a house. At a cost to the homeowner he’ll do an analysis of the neighborhood that is thorough and come up with a value.
This is not an exact science, more an art, and the knowledgeable real estate associate may be able to come up with an equally valid one, but at least it comes from a disinterested party.
An appraiser may also come up with a different square footage than the courthouse, and with total area being an important part of the pricing formula the difference may be more than enough to justify the cost of the appraisal. Even if not all square-footage is equal, a house perceived to be larger would often be considered more enticing.
When your house is on the market square footage must be taken either from courthouse records or from a signed affidavit by a licensed appraiser, either is considered equally valid so you’re justified in taking the largest one.
As Ritchie says, most realtors will give you an honest and reasonably accurate assessment of price. Should you go the extra step and get an independent appraisal?
David Lloyd Jones is an associate with Prudential-Dietrick Realtors. He can be reached at 381-2345.