Thank you both for your feedback! We had the same reaction, sushipup1. When he presented the idea, it sure seemed like it was developed with the buyers' interest in mind more than ours. The one thing that is really making us think about this is knowing that we wouldn't have to move twice. We hope we could find another buyer who could wait, but of course there's a good chance we wouldn't. And SaltiDawg, I really like the idea of making the offer accepted contingent on a satisfactory appraisal. If we move forward with this plan, we'll definitely do that. Thank you.

What Saltydawg said AND find your own appraiser or use the lender's appraiser. . Don't use the real estate agent's.

No way would I agree to an unknown appraisal price. Appraisals can swing widely based on the comps used. If it's too high for the buyer or too low for you, you'd end up haggling over the appraisal anyway.

What's the problem with just determining the listing price now? If you sit down with comps and numbers, you should be able to do it in an hour or two at most, and that's if you're super analytical like me.

Your realtor thinks you are a fool to accept an appraisers valuation before you know what it is. What I have heard done is having the seller and buyer each hire an appraiser, average the two values, and then proceeding if both parties are OK with the price. And yes commission should be about half of what he would otherwise charge.

Thank you all so, so much. weedyacres, you pretty much read my mind with everything you said. We'll definitely be having a talk with the realtor (no disclosure of minimum satisfactory appraisal value, of course)!

Here's another person who does not understand the rationale of setting the price by appraisal... like others have said, why not just valuate the property, pass your list price on to the buyers, and then move forward. What ever you do, do not enter into a contract w/o an agreed upon price upfront. Doing it this way can cause lots of problems. One of the parties is gonna feel shafted when the appraisal comes back. Also, do not let them view your home until you told them what the asking price is.

I'm a retired appraiser. The first thing an appraiser asks when assigned an appraisal is what is the purpose of the appraisal? Is it for a lender to make financing decisions? Is it determine a valuation for an estate? Is it to determine a valuation in the case of divorce. Is it to determine a value for a potential sale?

Ordering an appraisal for the purposes of setting the price of a property for both parties is entirely appropriate, but unusual. The majority of real property appraisals are for the purposes of determination of valuation for a lender.

The reason an appraisal for a private sale price is unusual is because the respective parties can usually determine an agreeable price by using the more informal and cheaper brokers price analysis without incurring the charges of an appraiser. It's to save money. Someone has to pay for an appraisal. BPA's are mostly free. They don't have to meet the more stringent USPAP standards and ethics that bind appraisers.

Also, if you were to order an appraisal, it could not be used by the lender to authorize financing because the purpose of the appraisals are different. Remember, the first component of determining valuation is purpose. The purposes are different. Therefore, the valuations may be different.

I suggest you have a neutral agent create a BPA and negotiate from that point. Each of you could get your own BPA and negotiate. An appraisal will still be ordered when financing is required. I hope this helps the process.

pjrae,

Excuse me to ask homechef an off subject question:

It is so interesting.....

For one specific house, could you please share how much differences in VALUE among those different type of appraisals -- Is it for a lender to make financing decisions? Is it determine a valuation for an estate? Is it to determine a valuation in the case of divorce. Is it to determine a value for a potential sale?

homechef, thank you in advance for the reply.

The estate appraisal is based on information available using a date of death and are usually a date in the past rather than the date the appraisal is completed. Those are fun to do because they are little different. Divorces are often retrospective but could be present date. It depends on the need of the client.

If you were to do an appraisal such as the one proposed in this thread, I would suggest to the parties that they do a limited report. This would mean using just one of the three forms of valuation, the sales analysis. Cost and income won't be needed for their purposes. A range of valuation may be more useful. If a full report isn't desired, the reasons for this limited report must be explained in the report.

The appraisal ordered by a lender will require very specific techniques involving the three methods of valuation and a reconciliation. This is the most detailed type of report.

All of these types of appraisals must comply with USPAP. No exceptions. I hope this answers your question.

homechef,

Never know the reports are date dependent based on the request, very interesting.

Thank you so much for the insights, they are very appreciated.

Hopefully, you have set your price based on the comps and not relied on an appraiser to determine your price. Remember appraisals have a built in lag time because they are using closed sales. In active markets it is less of a concern because there is a minimal lag time period (weeks as opposed to months). Personally, I think it is odd that the agent suggested that the appraiser set the price in the first place rather than analyzing the comps with you, the seller, to determine a pricing strategy. As pointed out in homechef59's post, there are different appraisals for different needs and the buyers' lender isn't going to use the appraisal from the initial phase to set the price. Please let us know how it turns out.

Denita, As I explained previously, appraisals do not have a built-in lag time. Each appraisal is unique. Appraisals can be prospective if that is the assignment. It is my guess that the motivation of the two parties may be to attain an neutral to determine a valuation. If they are trying to set a mutually agreeable price without putting the property on the open market, they need an unbiased assessment of valuation. An appraiser can provide that unbiased valuation. A realtor must be engaged by one of the parties to provide a market analysis. The assumption would be the realtor would be biased towards the party that they represent. The appraiser would function as an unbiased neutral.

Apparently appraisals aren't an exact science. We're selling our house and our realtor paid for an appraisal, since ours is a unique property. Her appraiser came in at 276k. We listed for 275k. After a couple of months and no interest we were asked to drop the price. We dropped it to 245k. My husband was upset, so we paid for our our appraisal and ours came back at 225k. Now our listing price is 220k. Only one low ball offer in 6 months. The stress is killing me.

The house is worth what a buyer and seller agree to. A friend of ours owns a unique house built of stone and concrete (inspired by Frank Lloyd Wright's Taliesin West) shaped as 4 interlocked hexagons. She has been trying to sell it off and on for 30 years with no buyers coming close to a price she wants to accept. Is she unrealistic or are dozens of potential buyers over the years unappreciative? Probably some of both but ultimately she does still own the property.

The one facet that appraisals do not take into account are the intangibles, such as floor plans, sloping lots, power lines nearby or in view, steep drives, and just "that feel" that some homes put off. These are qualities that an experienced agent can and should adjust for. It has gotten better since the meltdown, but I believe these items should be taken into account when determining the value for a buyer and seller. Not dissing appraisers here at all, because their job is to determine what the value is from a lender's perspective, who are more interested in the tangibles.

While it is not typical for things to be done this way, it seems to me the agent is trying to avoid any conflict of interest by pricing your home and having the buyer which is why she is suggesting having an independent appraisal done. If you live in an area that is having multiple offers right now, it would not benefit you as far as pricing goes to do it this way. If you are not in that type of market, it could save you a lot of headaches and the inconveniences of having your house on the market. If you do decide to go with an appraisal, I would find my own appraiser, not use one that is suggested by the agent in this case.