For Sale By Owner (FSBO) Appraisal

Should I order an appraisal for a FSBO?

An appraisal is important because it helps you determine the fair market value of your property. Pricing your home too high could result in a lack of interest from potential buyers. Pricing it too low could lead to a loss of profit. An appraisal can also help you identify things that affect value. Addressing these items before putting your home on the market can help maximize its value. 

It is up to the seller to determine if hiring a professional real estate appraiser is something they would benefit from. Even if you have done your research and feel that you know what you can get for your property, you may want to ask yourself a few questions to determine if you should get an appraisal before selling FSBO.

Can An Appraisal Save You Money?

Imagine a scenario where you have researched sales from Zillow and Redfin, and maybe you know what a neighbor’s house sold for six months ago. With this information you decide to list your house for $385,000. For your own piece of mind you decide to hire a professional appraiser to provide a valuation. Now imagine the appraised value is $400,000. That is $15,000 higher than what you were about to list the home for. Our appraisal fee for a typical residential property is $500 – $600. Would you pay this to save $15,000?

Will an Appraisal Speed Up Your Sale? Why Is This Important?

A cost often unaccounted for in the sale of real estate is the cost of holding onto a house for a period longer than anticipated. These costs include the mortgage, taxes, insurance, utilities and maintenance costs, we will call them holding costs. Imagine needing to move in two months, but your home takes five months to sell because it was priced too high. You now had to make an additional three months of mortgage, taxes, insurance and utilities payments on an empty home (plus your new living expenses). 

Here is an example of potential holding costs for a $400,000 home, for three months, based on estimated published averages:

• Mortgage payment is $2,700 per month x 3 months = $8,100
• Taxes are $5,600 per year = $1,400 for 3 months
• Homeowners insurance $4,400 per year = $1,100 for 3 months

The additional holding costs for three months would total $10,600, plus utilities and any maintenance. These additional holding costs are 18x – 21x the cost of an appraisal.

Is An Appraisal Worth The Cost? 

The examples above are considerations to weigh, there may be more for your particular situation. In the end you need to take a realistic look at the risk-to-reward ratio and determine if you are confident pricing your home on your own. In most cases the sensible choice is to seek the opinion of a professional appraiser. The small amount of money spent could potentially save you money, time and aggravation.