So you want to sell your house?

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We are quickly approaching the home selling season in Wisconsin. In my experience, buyers get busy on the first warm sunny weekend in February or March so it’s time to get ready.

What’s the first step? Find out what your home is worth. That means getting it appraised. Yes, that will cost you. In Wisconsin it may be $350 or more but it’s well worth it. You need to know the right price to offer it for sale. Later, when you get an offer, you need a basis for negotiating price.

Many will bypass the appraisal step to their detriment. Frequently they think getting a market analysis from one or more real estate brokers is a fine substitute. It is not. Appraisers are trained and skilled at establishing the fair market values of properties. Real estate brokers are trained and skilled at selling properties. Brokers’ market analyses are really sales tools. They use them to get listings and convince buyers/sellers to take action. They do not use the same procedures and techniques as appraisers.

Because market analyses are sales tools, brokers have a built-in conflict of interest. My past experience with Mrs. H is a good example. Mrs. H wanted to sell her home. I recommended that she get an appraisal. She agreed, but she also wanted to get market analyses from a few brokers. I suggested she wait for the appraisal. What happened next reminded me a lot of “Goldilocks and the Three Bears.”

Three brokers provided market analyses. The first broker said Mrs. H should ask for $560,000. She was not happy. The second broker said Mrs. H should list for $625,000, suggesting that the first broker did not know what she was doing. Mrs. H was much happier. Then she met with the third broker. He said the other brokers were not as experienced as he was, and clearly Mrs. H should list her house for $700,000. Mrs. H was ecstatic. FINALLY someone understood how special her home was. She hadn’t yet received the appraisal, but she signed.

The appraisal came in at $600,000. The property sat without an offer for six months, despite lowering the asking price twice. The week the listing contract was set to expire, the broker brought her an offer for $560,000. Mrs. H was floored and took the property off the market. The following spring, Mrs. H had the property reappraised. She listed it accordingly and got a $600,000 offer in five days.

Brokers will tell you that the most important thing you can do when selling your home is to offer the property at a realistic price right from the start. Your property gets the most exposure and buyer activity when it is first on the market. Lowering the price later is a failing strategy. When a property doesn’t sell, buyers may think there are problems. Besides, it is very hard to get buyers to come back for a second look.

Get an appraisal now so you are ready to talk to brokers and buyers. Get recommendations for appraisers, but not from your broker. Do not use an appraiser who is also a broker. You need someone who is independent, someone whose only income comes from the fees charged for appraisals. A fee-only appraiser has no conflict of interest. Their success is directly tied to establishing an accurate opinion of the fair market value of the property.

Next time I’ll address what brokers bring to the table when selling your property. A good broker makes a difference.

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