Anytime a house sells to a buyer who is financing their purchase, the lender will require a third-party appraisal to verify the property’s value and determine what they’re willing to lend. As a separate matter, sellers also have the option to get their own pre-listing appraisal to set an asking price.
This begs the question: Should I get an appraisal before selling my house? Is it even the best way to price a home? When might a pre-listing appraisal make sense?
Get a Free Home Value Estimate
Enter a few details about your home, and we’ll provide you with a preliminary estimate of value in less than two minutes. This won’t replace a comparative market analysis (CMA) or home appraisal, but it can be a helpful starting point.
While an appraisal is one method of assessing home value, it isn’t the typical way to decide on a listing price. Usually, a top real estate agent’s comparative market analysis (CMA) is all you need to gauge what a buyer is likely to pay for your home, saving sellers between $300 and $500 in extra expenses if they order an appraisal.
Moreover, a CMA reflects your area’s current real estate market conditions. And you can always get a free online home value estimate as a starting point. However, certain scenarios may justify obtaining a pre-listing appraisal. In this guide, we cover what those special circumstances may be so you can make an informed decision.
Other reasons to get a pre-listing appraisal
Let’s say the above factors don’t apply to your home. It isn’t located in a rural area, and it’s surrounded by similar properties. You may still want to get an appraisal if:
You inherited the home
If you’ve inherited a house and plan to sell it, it may be helpful to get a pre-listing appraisal — especially if you’re not familiar with the area or if the home has unique or historic features that make it tough to pinpoint its value.
An appraisal can also be helpful if the house was inherited by multiple heirs who can’t agree on a price. In addition, an appraisal may be required as part of the probate process.
You’re not receiving offers
If you decided to list your home based on your real estate agent’s CMA and it’s been sitting on the market for a while without any offers coming in, it may be time to hire your own appraiser. In many cases, the issue with a stagnant listing is that it’s not appropriately priced.
You’re dividing marital property in a divorce
Divorce is tough enough without having to argue over how much your home is worth. Getting an appraisal before selling can help both parties agree on a fair market value, making it easier to divide assets. Without an official valuation, one side might feel shortchanged, which can lead to more conflict. A professional appraisal provides an objective number based on market data, not emotions, so it’s harder to dispute.
If one spouse wants to buy out the other, an appraisal ensures they’re paying a fair price. It also helps in cases where the home needs to be sold quickly, setting realistic expectations on pricing. Overall, an appraisal can reduce stress and prevent financial disputes from dragging out longer than necessary.
You’re selling without an agent
If you’re selling your home for sale by Owner (FSBO) and handling the entire transaction without a Realtor, you need to be more mindful of the home’s pricing. Without expert guidance, it’s easy to overprice and scare off buyers or underprice and leave money on the table.
An appraisal gives you a clear, professional valuation so you can list with confidence. Buyers might also take your listing more seriously if you can back up your price with an official report.
Since FSBO sellers handle everything themselves, having an appraisal can help during negotiations, especially if a buyer tries to lowball you. It also saves time by giving you a solid starting price instead of guessing. Getting an appraisal before selling FSBO makes the process smoother and helps you price competitively.
Your home hasn’t been appraised in years
If it’s been a while since your home was last appraised, a lot could have changed in the market. Prices might be higher or lower now, and important selling factors like interest rates, neighborhood trends, or new developments may have affected your home’s value.
Getting an appraisal gives you an up-to-date idea of what your home is really worth in today’s market. Without it, you might risk pricing it too high or too low, which could lead to it sitting on the market longer than you want or missing out on good offers.
Cons to getting an appraisal before selling
If you decide to get an appraisal before selling, you should be aware of the following:
It costs money
With a traditional lender’s appraisal, the associated fees are typically the buyer’s responsibility. But if you’re ordering your own appraisal before listing, you’ll have to cover the cost yourself.
According to Brenan, the cost of an appraisal is determined in the open market and can vary widely based on the property type and the complexity of the assignment.
“For homogenous properties in markets with considerable recent sales data, an appraisal could be anywhere from $350 to $750, or even higher,” he says. “As the complexity of the assignment increases, the appraisal fee will generally follow.”
Taflinger says that most appraisals in his Indiana market are in the $400 to $500 price range, but for homes with very unique features, horse farms, or commercial properties, the cost can escalate to around $2,000.
Meanwhile, the latest National Association of Realtors (NAR) Appraisal Survey found that the typical cost to complete an appraisal is $500 to $599.
The lender will still require an appraisal
“It’s important to understand that a lender could not use a pre-listing appraisal to make a loan decision for a potential homebuyer because the law requires lenders to engage appraisers directly in lending transactions,” notes Brenan.
Two appraisals can result in two very different numbers, so your lender-ordered appraisal could still come in lower than the value assigned by the pre-listing appraisal. In other words, no matter what happens with your pre-listing appraisal, a lender will still order their own third-party appraisal to determine how much they’re willing to lend the buyer.
If the appraisal comes in under the contract value, that difference will need to be made up somehow. The buyer can bring extra funds to the table, you can reduce your price, or you can negotiate a compromise somewhere in the middle. Or, the buyer can invoke their appraisal contingency and walk away from the deal altogether.
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