Can I Sell for More Than Appraisal Value?
Great question!
The short answer is “yes, it’s possible”...
...but there’s much more to it (not all positive), so read on if you’d like to make your dream happen, but you don’t have a plan yet...
If you’re reading this, then you are probably in your “market research” stage: You may be thinking of relocating out of Fort McMurray to a new town or moving to a different home within Fort McMurray, one which suits your family/lifestyle better. You may be concerned because your home value has fallen over the last three years and that could be a problem.
First Of All: What Is Appraised Value?
The value of your home is never really known. I think it’s closest to known on the day that it sells. Values change over time depending on supply and demand for properties like yours, which is affected greatly by the wider economy.
But members of the public, from time to time, are exposed to estimates of the value of their homes. Sometimes you might request them from professionals, and once a year (in Jan/Feb), they show up in the mail from the Regional Municipality of Wood Buffalo (RMWB) in the form of a municipal tax assessment.
There are three sources estimates of value that you are likely to come across in your life as a homeowner:
a) Tax Assessment
Each year, the RMWB estimates the value of every property in Fort McMurray. It shows up towards the beginning of the year, but the estimate is for the middle of the previous year. It is used to estimate your municipal taxes (which depend on home values) for the current year.
The thing to know is that, of the three estimates, these are the least accurate. Municipal assessors are talented people with incredible tools, but their access to information about your home is somewhat limited: For example, they have probably not been inside your home for some time.
In the coming days, we’ll be writing a post specifically about the upcoming tax assessments and what they mean for you as a homeowner. In the meantime, there is lots of info on the RMWB website:
Your assessment notice indicates your property’s market value — the amount it may have sold for on the open market as of July 1 of the year prior to the tax year — and your property’s physical condition as of Dec. 31 of the year prior to the tax year. The market value is then used to calculate the amount of taxes you pay through the application of the appropriate Mill Rate as determined by Council.
All properties are assessed using similar factors that real estate agents and appraisers use when pricing a home for sale such as location, size and quality of construction. Via www.rmwb.ca
b) Comparative Market Analysis (CMA) From REALTORS®
Our listing agents price homes for potential sellers. Our goal is to provide an unbiased, accurate, scientific document without emotion. This document estimates the value of your home today by finding the most similar homes to yours that have recently sold, as well as similar homes that are currently listed, recently expired, or pending. Adjustments for any differences are estimated, then summed, for each of the comparable listings.
Out of the other end comes not only an estimated value today, but an expected sale price and a recommended list price. A lot more is learned through this process, too. For example, agents provide you with in-depth market knowledge, suggestions on how to maximize the sale price, and a mature picture of how your home sits in the market (for example, is there a niche?).
When done correctly, this work can be extremely accurate. If we don’t have much data, then it can be challenging, but your specialist A-Team listing agent will give you a sense of the degree of uncertainty, too. Together, you can determine the optimal strategy for you, based on this information, as well as your personal motivations.
As REALTORS® (& especially as a team of agents), we have the advantage of knowing your home and the comparables. We also sell a lot of homes, so we have a good idea of what list price will be required. We provide this service free of charge or pressure.
c) Formal Appraisal
Appraisers are the pricing gods of the real estate industry. Their job is to price homes for their client. As REALTORS®, we defer to their superior knowledge and tools. Often their estimates are based on MLS® data. While they aren’t REALTORS®, they are extremely familiar with your home, the market and the comparable listings.
Their estimates are the most accurate and if you are not sure, just like with REALTORS®, you can call more than one. Unlike many real estate agents, however, their service is paid.
Can I Sell for More?
It’s happened before, and it will happen again! Part of this is because estimates of value are just that. Part of it is that buyers may not do great pricing due diligence themselves, and part of it is that home valuation is subjective. Someone might fall in love with your home.
This is much more likely in a seller’s market (characterized by a listing shortage) than a balanced market. A buyer’s market, where buyers are more focused on price, will offer less of an opportunity to sell for over appraised value.
Woah There Nelly!
Before we get too carried away, there are at least three considerations:
Firstly, the lower price ranges for most property types appear to be moving from a buyer’s market to a balanced market, but it’s uncertain and the higher price ranges remain oversupplied. Premium pricing should be done carefully and based on the home, the owner, and the time of year.
Secondly, we’re only talking a small premium, and even then, the likelihood of selling for slightly above estimated value is not high.
Thirdly, if you’re thinking of listing your home with a real estate brokerage (for example our own, RE/MAX® Fort McMurray), then you will need to agree on a list price with your agent. The busiest agents (for example, A-Team listing agents) sell the most homes, and while of course, our fiduciary duty is to look after the best interests of our clients, we also don’t make you happy or earn your referrals by not selling your home. It’s also arguable that taking an overpriced listing is not in your best interests.
Moral Of The Story
If anyone can sell your home for more than it is worth, it’s us. In many ways,
selling a home for top dollar (in any market) is the central career challenge of a
listing agent. We’ve developed systems to make this happen systematically for our clients.
But you will want to temper your expectations, depending on the market type (we’ll be sure to inform incredibly well prior to listing). Further, premium pricing can be a gamble which could actually result in a lower eventual sale price. It sounds counter-intuitive, but when you think about it, it makes sense considering that most buyers are excited about new listings.
The reality is that many people reading this post will be disappointed. We aren’t magicians, and if you need to sell your home for a lot more than they are going for right now, there probably isn’t a magic bullet either. You may have to work extremely hard over the long-term to put yourself in the position to sell. Once you’re in that position, we’ll work just as hard to execute your transaction for you with minimum stress and for MAXIMUM PRICE.
Thanks for reading/sharing and please feel to reach out if you’d like help. :)