Even if you’re new to this whole selling-a-house thing, chances are good you’ve heard of a home appraisal. And if you know just a little about the process, you know that the appraisal—a value put on your home by an objective third-party expert—can make or break your home sale.
For many sellers, it seems logical: Get a professional opinion on your home’s value before you list, set the right asking price, and attract serious buyers. But here’s the thing: Getting a pre-listing appraisal could actually end up costing you more than it helps.
Here’s what sellers need to know about the cost, purpose, and potential downsides of getting a home appraisal before listing your home.
What is a home appraisal—and when does it usually happen?
A home appraisal is a professional estimate of your home’s value conducted by a licensed third-party appraiser. It’s most commonly ordered by the buyer’s mortgage lender to ensure the property is worth the purchase price before approving the loan.
“The collateral for the loan is the home, so lenders require an independent appraiser to inspect it and advise on its value,” explains Michael Drake, president of PMG Home Loans.
That’s why appraisals usually happen after an offer has been accepted—not before a property is listed.
Why a pre-listing appraisal is rarely necessary
If you’re thinking of getting an appraisal ahead of listing your home, it may seem like you’re doing your due diligence. But it’s often an unnecessary (and expensive) step.
- Cost: Appraisals typically range from $300 to $500, but can climb into the thousands for large homes or properties with extensive land.
- Limited usefulness: Most lenders won’t accept an appraisal provided by the seller—they’ll require their own, using an appraiser from their approved network.
- Redundant with agent services: A skilled real estate agent can provide a comparative market analysis (CMA) for free, using recent local sales to estimate a competitive asking price.
“Appraisals aren’t done at the beginning because the lender wants to assign the appraisal company that they work with,” says Julie Upton, a real estate agent in California’s Marin County. “And they may not accept an appraisal that the seller did at the time of listing.”
Home appraisal vs. market value: What sellers need to know
Here’s where it gets tricky: The appraisal value and market value of a home are not always the same.
- Market value reflects what buyers are actually willing to pay—which can be influenced by emotion, competition, and local demand.
- Appraisal value is based on a standardized formula, factoring in square footage, condition, and past sale data.
“The market value is what someone is willing to pay for a property—often influenced by emotion and how competitive the area is,” Upton explains. “In a multiple bidding situation, prices are driven up because buyers get emotionally caught up in the bidding process and may pay well over an appraised value. If someone really wants a property, they won’t care what the appraised value is, they simply want it no matter what.”
Meanwhile, the appraisal has more to do with “bones” and any significant historical changes made to the property, according to Upton.
While both real estate agents and appraisers use comparable sales (also called “comps”), and the two values often end up being similar, the market value is the one you should be most concerned with as a seller.
How to price a home without an appraisal
Real estate agents will use comps to pull recent data on other houses (that are similar to yours) to arrive at a market value.
“We compare other properties that are close to this property, similar in size, construction, and condition, that have recently sold or are on the market,” Upton says.
Agents will also do a walk-through of your property and talk with you before arriving at a number you both feel comfortable listing at.
Can a pre-listing appraisal hurt your sale?
Getting an appraisal in advance isn’t just a waste of your time—it’s also expensive. Depending on where you live, appraisals start at $300 to $500, and if you own a lot of land or a very large house, you may end up paying a lot more.
“An appraisal can cost thousands, depending upon how big the home is,” Upton says. “Land is also very hard to appraise, so sometimes a land appraisal is higher than homes.”
Getting an appraisal done ahead of time might even end up losing you money on your home sale.
“Getting an appraisal before putting your property on the market may actually cause you to get less for your property, as the appraised value could very likely be lower than what you believe is the property’s market value,” Upton says.
The final word? Save yourself some time and aggravation—let the buyer foot the bill on this one.
Allaire Conte contributed to this article.
