I have interviewed three real estate agents regarding the sale of my mother’s home. Last October an appraiser valued the home at $1,400,000. The real estate agents I interviewed have suggested listing the home at: $995,000, $1,050,000 and $1,200,000. Why do you think there is such a discrepancy among them and why do you think all of them are so far off from the appraised value?
Without knowing more about your mother’s home, it is difficult to answer your question.
It is interesting that two of the Realtors were within $55,000 of each other’s value. Did the agent who suggested the $995,000 recommend that price expecting that you would sell in a multiple offer situation and hopefully bid the price over the $995,000? If so, this brings the $55,000 range closer together.
An appraisal is an unbiased estimate of what a buyer might expect to pay – when both buyer and seller are informed parties. The appraiser often utilizes sales comparables which are as much as six months old (add a 45 day escrow to the six months and you realize how old these comparables can be).
In a softer market, such as what are experiencing, I typically give more importance to active listings (your competition – what buyers will be comparing your home to) which I feel are more important. And then I also like to analyze the homes which are currently in escrow and how quickly they sold.
A Realtor’s market assessment is typically a more accurate reflection of today’s market, not last month’s – simply because the appraiser is looking at sold comparables (some as old as six months). When I complete a market assessment for a client, I am trying to determine today’s value based on today’s active listings and recent “in escrows.” Whether an appraisal or Realtor’s market assessment, the current competition must be given the closest scrutiny, unless of course you only want to know what the home was worth six months ago.
Phyllis Harb is a Realtor with Prudential California Realty.
She may be contacted at (818) 790-7325 or by email AskPhyllis@Realtorharb.com.