Another Day, Another Baton Rouge Homeowner Loses $9,000 In Equity
Another day, another Baton Rouge homeowner loses $9,000 in home equity because they sold their home without hiring a local professional to measure and properly price their home. Whether selling by owner or listing with a Realtor, get a listing appraisal for the peace-of-mind it will provide to you at the closing table.
Approximately 40 days ago, another Baton Rouge homeowner decided to sell their home without consulting a local real estate professional. They thought they knew the value of their home. The home is located in an upscale area, somewhat high quality, only 9 years old – the kind of home that wouldn’t be on the market for more than 30 days. However, the home was larger than the owners had remembered.
The owners chose to market their home For Sale By Owner (FSBO) and sold the home for $9,000 less than appraised value and the home could have appraised at $13,000 above sales price with 2 of the 5 comps used. If the sellers were a typical American family with credit card debt, that same $9,000 could have paid off a credit card.
An experienced local home appraiser would say: “I have witnessed this happen far too many times, especially when homeowners try to sell FSBO.” While it’s human nature to try to save my on an appraisal fee or a real estate sales commission, a home is the largest investment most people make in life. Not hiring a professional to properly measure and price your home is like taking a bar of gold to the local coin store to sell without knowing its’ size (weight) or value – not wise!
What’s the Solution? An experienced home appraiser would say, “A Pre-Listing Appraisal will provide the well documented facts about your home, which are crucial in proper pricing – facts such as an accurate living area size based on the National ANSI Standards and a correct site or lot size. The local professional must actually measure your home and be well versed in ANSI as to what qualifies as living area and what areas of your home do not.” Yes, it may be necessary for the local professional providing this service to break-a-sweat and actually physically measure your home and then use a professional sketching software to determine accurate living area size. There’s no other way to obtain an accurate living area. Old house plans and older MLS listings in the MLS history shouldn’t be relied upon for your home’s physical data. Revisions to house plans can and do change during the construction period. A home appraiser would normally ask the question, “How can a home be properly priced without accurate sizes?” It can’t be and this is why sellers sometimes lose money when they sell their homes. A home appraiser would also ask the question, “When is the right time to discover the correct living area size, at the beginning when pricing the home or later on after the purchase agreement has been received and accepted only to have the appraiser turn in an appraisal that’s less than or more than the sales price all because the home wasn’t properly measured?”
What is a “Pre-Listing Appraisal”? It’s a professional, color appraisal report one can proudly place on their kitchen table to answer any questions about your home or objections to your asking price. It includes:
1) Accurate Sketch based on ANSI Standards Produced By Modern Software
2) Correct Lot Size
3) Recommended Listing Price based on 3 to 5 sold comparable sales and 2-3 active or pending listings
4) Your Subdivision’s Statistics Report – Subdivision or Area Trends
5) Flood Map
7) Location Map
8) Any recommendations to better prepare your home for listing
How much do Listing Appraisals performed on a FNMA 2055 form generally cost? Approximately $100 less than the typical “Full FNMA 1004” appraisal. It depends on each appraiser offering this service and most appraisers do not offer this service.
Can a Pre-Listing Appraisal be used by the buyer of my home? This is entirely up to their lender. The lender will want the appraisal upgraded to the FULL FNMA 1004, which requires more work and analysis. The lender may also want an FHA Appraisal and FHA Inspection of your home, which requires more work and analysis.
The Bottom Line: Have A Professionally Measured Sketch Of Your Home In Your Hands When You Begin The Listing Process whether you’re listing with a Realtor or FSBO.
For the Baton Rouge couple that sold their home, being only 10 years from retirement, they didn’t need that $9,000 to $13,000 in equity to evaporate into their buyers hands. When you want to sell your home, the most expensive investment people make in life, order a Pre-Listing Appraisal for the peace-of-mind it will provide to you while sitting at the Title Company closing your sale.
Bill Cobb, CREA, is a home appraiser with 16 years experience and performs his home appraisal specialty of Pre-Listing Appraisals in the Greater Baton Rouge Louisiana market. One can view the video “Pre-Listing Appraisals Explained” or contact Bill Cobb at http://prelistingappraisals.info. One can also visit his website at http://www.gbrprelistingappraisals.com/ .