It goes without saying (but I’ll go ahead and say it) that Seller’s want to get the absolute maximum price for their home and Buyer’s want to pay the absolute least.

A lot of people think the “right” price is somewhere in the middle or whatever both the Seller and Buyer agree upon.

I only wish.

In today’s market with the glut of houses on the market and with a lot of those either in short sale or full foreclosed status, prices are really a moving target.  Mortgage companies play a big part in establishing prices for homes.  These lenders do not want to be on the hook for a home that is priced too high if the Buyer defaults on the mortgage (very common nowadays).

Enter the Appraiser

The Appraiser is a person contracted by the bank to establish the true value of the house.  Appraisers go through a rigorous training and licensing process. They use a variety of factors to determine the true value of a house and submit their report to the bank. Whatever the value the Appraiser says the house is worth is what the bank will base their mortgage on.

It does not matter, in the least, that the Seller and Buyer have agreed on a price.  It barely matters if the Seller has given a huge credit for closing costs to the Buyer (it does matter some). Improvements matter but not as much as you might think.

The bottom line is that Sellers can price their home (in consultation with their Realtor) based on what they think it might be worth.  Sellers might even agree to a price the Buyer thinks the house is worth. It will be the Appraiser and the underwriters at the mortgage companies that will tell you what it is really worth.

So, it might be a good idea to spend the $300 – $400 to get a licensed appraisal prior to listing your home.  It could save a lot of money down the road by having your home sit dormant on the market…unsold.