Dollars and Sense: Get an appraisal before you sell

In a number of areas of the country, real-estate sales have slowed and in some cases have come to a complete halt. What this means is that there are more potential homes available per buyer, and sellers are having to make tough decisions: lower the price, stay firm about the asking price, or take the home off the market altogether.

Whether you’re a buyer and an appraisal is part of your lender’s requirements, or you’re about to put your house on the market and want to know how to price it, an appraisal can help you determine if the selling price is fair and accurate.

According to the Appraisal Foundation, an appraisal is “The act or process of developing an opinion of value.” The value that is placed on a property is what it will likely sell for, based on the highest and best use of the property. An appraiser is the one who determines the value of the real estate, and is required to be licensed or certified by the state and who meets educational requirements.

Whether you’re on the buying or selling side of a transaction, the Appraisal Institute recommends that you get information about any potential appraiser:

“Is the appraiser licensed in your state?

“How long has the appraiser been in business?

“Is the appraiser familiar with properties in your neighborhood?

“How far away will the appraiser work to find “comps” (comparable properties), as too much distance can skew the numbers. Appraisers have a difficult time putting true values on homes in a slow market because there is less data available.

“Verify that you will be given a copy of the appraisal. Go over it carefully, especially the comparable houses. Do the values assigned to the other houses seem reasonable and accurate?

If you’re a seller, keep an eye on selling prices in your neighborhood. It helps to have a friendly real-estate agent pull comps for you. (Try to get them for the past year to see trends either up or down in price.)