Why Real Estate Agents Should Use Certified Real Estate Appraisers When Listing a Home
When listing a home, setting the right price is crucial. An accurately priced home attracts more buyers, sells faster, and often secures a better price. While many real estate agents rely on Comparative Market Analyses (CMAs) or Multiple Listing Service (MLS) data to determine listing prices, these methods can be misleading. Certified real estate appraisers offer a more precise valuation, ensuring a fair market price. This article explores why using a certified appraiser is superior to relying on CMAs, MLS data, or Automated Valuation Models (AVMs) like Zillow and Redfin.
The Limitations of Comparative Market Analysis (CMA)
A Comparative Market Analysis (CMA) is a common tool used by real estate agents to estimate a home’s value by comparing it to similar properties recently sold in the area. While useful, CMAs have significant limitations:
- Limited Analysis: CMAs primarily use recent sales data but often overlook unique property features like high-end finishes, custom upgrades, or significant renovations. These aspects can drastically affect a home’s value but are frequently not reflected in a CMA.
- Broad Comparisons: CMAs typically rely on broad comparisons such as location, size, and number of bedrooms. However, they often fail to consider the finer details that distinguish one property from another, such as layout, specific home improvements, or the overall condition of the property.
- No Physical Inspection: Unlike certified appraisals, CMAs do not involve a thorough physical inspection. This means potential issues or unique features that could influence the home’s value might be missed.
The Misleading Nature of MLS Price Per Square Foot
Real estate agents often use the price per square foot metric from the MLS (Multiple Listing Service) to help set a listing price. However, this approach can be highly misleading for several reasons:
- Not a True Price Per Square Foot Calculation: The MLS price per square foot is not based solely on the living area (Gross Living Area or GLA) of a home. Instead, it typically includes the total sales price divided by all of the home’s improvements, features, and amenities, not just the actual living space. This leads to a skewed value that doesn’t accurately reflect the true worth of the property.
- Ignores Unique Property Features: MLS data often overlooks specific features that contribute to a home’s value, such as a home’s condition, the quality of finishes, or unique amenities like a pool or custom-built deck. This can result in inaccurate pricing, either overvaluing or undervaluing a home.
- Potential for Misleading Comparisons: The MLS price per square foot might compare homes that aren’t truly comparable. For example, it could equate a newly renovated home with one that requires significant repairs, resulting in a misleading average price.
Why Automated Valuation Models (AVMs) Like Zillow and Redfin Should Not Be Used for Pricing
Automated Valuation Models (AVMs) like Zillow’s Zestimate or Redfin’s Estimate have become popular tools for homeowners and real estate agents to get quick property value estimates. However, these models often provide inaccurate and unreliable valuations:
- Data-Driven but Lacking Context: AVMs rely on algorithms that analyze data from recent sales, tax assessments, and market trends. However, they lack the human insight needed to accurately assess a property’s true market value. They cannot account for the unique characteristics of a home or its condition, which can significantly impact value.
- Inaccurate Assessments of Property Features: AVMs don’t physically inspect properties, meaning they can’t see or evaluate important aspects such as recent upgrades, custom features, or overall home condition. For example, an AVM may not know if a home has a brand-new kitchen or if it needs significant repairs, leading to valuations that are often far from accurate.
- Over-reliance on Public Records: AVMs pull data from public records, which can be outdated or incorrect. Errors in square footage, number of bedrooms, or other key details can result in significant inaccuracies in the estimated value.
- No Local Market Expertise: AVMs lack the local market knowledge that is essential for accurate valuations. They use broad averages and general data that may not reflect the specific nuances of a local market. A certified appraiser, on the other hand, has in-depth knowledge of the local real estate market and can provide a more accurate assessment.
Why a Certified Real Estate Appraisal Is the Best Choice
Using a certified real estate appraiser provides a comprehensive and accurate assessment of a property’s value. Here’s why it’s the superior choice:
- Detailed Property Inspection: Certified appraisers conduct thorough inspections of the property, considering its condition, quality of construction, recent upgrades, and any unique features or modifications. This hands-on approach ensures an accurate valuation based on a complete understanding of the property.
- Precise Market Adjustments: Appraisers have extensive knowledge of local market conditions and can make precise adjustments to the home’s value based on recent comparable sales. They consider the specifics of the home and neighborhood, providing a more accurate and fair market value.
- Accurate Measurement of Square Footage: Certified appraisers measure the actual living area (GLA) of a home, ensuring that the valuation is based on accurate square footage. This accuracy is critical for determining a fair market value, unlike MLS or AVM estimates.
- Objective and Unbiased: Certified appraisers are trained professionals who provide objective, unbiased valuations. This impartiality is crucial in real estate transactions, ensuring that all parties have confidence in the home’s assessed value.
- Essential for Complex Properties: When listing more complex properties, such as large custom homes, view properties, or acreage properties, similar comparable properties are often extremely limited. In these cases, a certified appraiser’s expertise is vital for accurately assessing value. They can use specialized knowledge and methods to evaluate unique features and characteristics that aren’t present in standard homes, ensuring a fair and precise valuation.
Conclusion: The Importance of Certified Appraisals in Real Estate Listings
For real estate agents, setting the right listing price is essential for attracting buyers and securing the best possible sale price. While tools like CMAs, MLS data, and AVMs offer quick estimates, they often lack the accuracy needed for a reliable valuation. A certified real estate appraisal provides a detailed, accurate assessment of a property’s value, taking into account its unique features and current market conditions. By investing in a certified appraisal, real estate agents can ensure a home is priced correctly from the start, leading to a faster sale and a more successful transaction.
If you’re considering buying, selling, or refinancing your home, investing in a certified appraisal is the best way to ensure you have an accurate understanding of your property’s value. Don’t leave one of your most significant investments to chance—trust a certified appraiser for the most accurate and reliable home valuation.
Meet the Author
Joshua L. Darrow – Certified Appraiser:
Joshua L Darrow is a seasoned Certified Residential Appraiser with 20 years of experience in the appraisal industry. He specializes in providing comprehensive residential appraisals for various purposes, including mortgage/lending for conventional and FHA-insured loans, estate appraisals for tax purposes, divorce appraisals, partition action appraisals, market value appraisals, pre-listing appraisals, for sale by owner appraisals, tax appeal appraisals, and measurement services. Known for his commitment to integrity, Joshua delivers non-biased, objective appraisal reports with the utmost professionalism and accuracy.