Former realtor recommends sellers enlist an independent appraiser to price their homes
Derrick Pen
Sun
Former Victoria realtor David Newsome is convinced homeowners risk losing money when they sell their homes if they leave pricing up to realtors rather than having an independent appraisal done.
Newsome says that during his five years in the business, he frequently saw bank-ordered appraisals on the buyers’ side show higher values than the agreed selling prices. Good for the buyer, but not so for the seller.
“Sellers are losing lots of money on the value of their homes,” which can take years to recover, Newsome said. “If a house sells for more than the asking price, the asking price was wrong.”
Not getting an appraisal done before hiring a realtor, Newsome said, is one of a handful of key mistakes he believes many people make when selling their home.
Newsome had his own home-inspection business for nine years before becoming a realtor with a view to helping sellers dodge these mistakes.
Now retired, Newsome has pulled together his advice for avoiding pitfalls in a system he has published on the website Sellingyourhome.ca.
Other mistakes, Newsome said, include not sorting out mortgage options before selling, not advertising enough, and being too eager to reduce an asking price if a home doesn’t sell quickly.
However, Newsome said the appraisal is key to pricing a home. Banks order appraisals before approving financing, and Newsome believes the market would also accept appraisals as a pricing measure.
He said he used the method himself when he worked as a realtor.
Dan Jones, president-elect of the Appraisal Institute of Canada in B.C., agreed that it is a good idea for sellers to have their properties assessed.
Appraisers, Jones said, are independent from the real estate transaction, and often look at properties in greater detail than realtors when it comes to considering the “contributory value” a homeowner’s renovations give to the property.
Jones said in his own business, financial institutions call for an appraisal in about 65 per cent to 70 per cent of real estate transactions, prior to approving mortgages. Homeowners selling their homes probably account for 20 per cent of appraisals.
“We’re an unbiased independent body that can assess the true value and worth of real estate,” Jones said.
However, Jones added that the challenge now, particularly in Greater Vancouver, is setting values in a market when there are more buyers than listings.
“People say, ‘I’m going to live there for 25 years, so if I pay five per cent more than list, does that really matter to me’,” Jones said. “Especially if the real estate market keeps going up.”
Dave Barclay, president of the B.C. Real Estate Association, said he’s seen cases where sellers have had appraisals done that showed lower values than realtor’s assessments, and were below a home’s actual selling price.
“If a market’s going up, quite often [appraisals] are running behind,” Barclay said. “If the market’s going down, it’s the opposite.”
Barclay added that realtors have a legal duty to their clients, and would be considered negligent if they didn’t consider the same factors that appraisers do when deriving a home’s selling price.
He said realtors also try to gauge where the market is headed by looking at prices of competing listing, and prices of comparable listings that haven’t sold.
“I think [an appraisal] is an opinion of value,” Barclay said, which sellers should take with a grain of salt.
“It’s really important for a seller to make sure they spend a fair bit of time … going through the information provided by the realtor, or the appraiser, and being comfortable with [the price].”
© The Vancouver Sun 2006
