When considering selling your house, maybe the first thing that comes to mind is “how much can I sell my house for?”. You likely have a decent sense of this if any houses have recently sold in your area, and you can definitely get in the ballpark with a little internet research as I will discuss below. But, what about appraisals? Can appraisals affect the selling price of a house in Atlanta? They sure can! Let’s take a look…
When Selling Your House, You’ll Be Juggling a Lot of Numbers
Believe me, I know how you feel. There is the asking price, the repair cost, and the closing costs to begin with.
There is the appraisal (what a real estate professional thinks your house will sell for), and then there is the actual selling price – what someone eventually pays.
We try to make these numbers as exact as possible, but it’s not easy! Often it’s more of a SWAG (Scientific Wild A** Guess) than anything concrete.
Let’s break each of them down in a little more detail:
Asking Price
This is the listing price, and what you would like to sell your house for.
In normal times, this is just a starting point for the buyer to negotiate down – much like buying a used car.
However, in this booming seller’s market, this number is frequently bid up by multiple offers.
This is why I recommend that you don’t set your asking price too high straight out of the gate.
If you set it too high, the house will sit on the market. This turns off potential buyers because they think something is wrong with the house, and you’ll eventually have to start dropping the price.
This turns off more potential buyers because they know that houses are selling in a few days in this market, so they feel like something is wrong.
But if you set the asking price at a lower starting point, and resist the urge to jump at the first response, then you’ll get multiple offers. You can then negotiate for the highest and best offer, and the final selling price will go up.
The point here is that the house is going to sell for something close to what it’s worth – regardless of where you set the listing price. Set it low, and you’ll sell faster. Set it too high, and you’re in for a long and frustrating process.
Repair Costs
Your buyer is going to get an inspection once you are under contract, and the repair costs are likely going to be estimated on the report.
Sometimes sellers get an inspection before listing to find some things that they can fix before listing, but I don’t think this is necessary.
Just fix anything cosmetic – paint, pressure wash, clean the carpets, etc. – and you’ll be good.
Once the inspection report comes back, your buyer may ask for some items to be fixed. But remember that in this hot market, the home seller has most of the leverage.
You may have another buyer who will purchase the house “as-is” without asking you for any repairs.
Closing Costs
In Georgia, both buyers and sellers pay for some of the closing costs. This is another negotiation point that can be discussed once the house is under contract and you get a sense of what the closing costs are going to be.
Closing costs add up pretty quickly, but remember that home sellers have the leverage in this market.
Appraisal
Then there’s the appraisal or valuation – the price that a real estate professional thinks your house is worth and what it will sell for.
Real estate appraisers are licensed professionals who are trained to estimate a home’s value by looking at all features of your house and recent comparable sales.
You can get a rough estimate of this pretty easily yourself using Zillow, but it will not be as accurate or comprehensive as a professional appraisal.
That being said, an appraisal can make or break your contract. Appraisals coming in for less than what the home is under contract for is a top reason that contracts fall through. I think you can see why this would be an issue.
Let’s say that you go under contract with a buyer for $200,000. The buyer’s appraisal comes back at $180,000. Do you think they are going to renegotiate at that point? Heck yes!
You can refuse to budge on your price, but a lot of buyers are going to have a tough time justifying paying $20k more than what an appraiser thinks it’s worth – unless it’s their dream home and they can’t live without it.
But, I’ll again go back to the point I’ve been repeating in this article. This is a negotiation point.
You may not be willing to go all the way down to $180,000 – but can you both be happy at $195,000? Or $190,000? It hurts to drop your price by $10k, but how eager are you to cancel the contract and put the house back on the market?
Then there’s another issue of what the buyer’s lender will approve. If your buyer is taking out a mortgage, their lender is not going to issue a loan for a home that is listed at a significantly overvalued price.
If the house is under contract for $200k, and the appraisal comes in at $180k – the lender may not approve the loan.
So can an appraisal affect the sale price of the house? Absolutely. And it often does.
What Can You Do?
If you want to avoid this scenario, here are a few things you can do:
- Get an appraisal when you list the house. Yes, this will set you back a few hundred dollars, but it can save you time and heartache later when your buyer has the house appraised. You can also use your appraisal as justification if the buyer’s appraisal comes in lower.
- Get a good real estate agent. If you are selling with an agent, a good agent will not only have a really strong sense of what the house is worth, but they will also be skilled at negotiating all these points I mentioned above. Spend some time upfront researching and interviewing agents that know your area well.
- If your house needs a lot of work, then give us a call. We can buy it (or find someone who can) and save you the hassle of all the above!
Thinking About Selling Your House?
Why bother with an appraisal at all? You can get a fair all-cash offer from us to buy your house fast… and then you don’t have to worry about getting an appraisal, or listing the house, or showing your house, or much at all really.
Just give us a call at (404) 500-8094 or fill out this form, and we’ll be in touch!