Pricing your home for sale can be challenging in a Seller’s Market. With such low inventory, many sellers are pushing prices as high as possible, and many buyers are willing to pay more if they like the property.

Once the purchase agreement is negotiated, and executed by both parties, it is sent to the buyer’s lender, unless the buyer is paying cash. The lender orders an appraisal for the bank to feel confident that there is enough collateral should the buyer default.

The appraiser selects between 3-7 properties to compare the subject property to. He or she will try to select properties that have sold in the last 6-12 months in the same neighborhood, with a similar age and style. The appraiser will add or subtract value for square footage, views, finishes, and amenities to determine the value for the subject property.

The bank will provide the loan to the buyer based on the purchase price or appraised value; whichever is lower. If the sale price is $205,000 and the appraisal comes in at $200,000 and the lender will provide a loan at 90% of the value, then the buyer puts down 10% of the appraised price ($20,000) and there is a $5,000 differential. 

In most cases we see the appraisal come in at or just above the sale price. But sometimes the appraised value comes in low. Sellers typically think the buyer will pay the difference between the sale price and the appraised value, but some buyers don’t have additional cash to cover the difference and they don’t qualify to purchase the home unless the seller drops the price. 

Some buyers won’t pay more than a property is appraised for, but if they have been looking for a while, and really want the property, they may pay the difference. Most of the time the price is renegotiated.

Sometimes we are successful in disputing the appraisal and we can get the price up, but that is not the norm. 

When we help our sellers determine their list price, we review the sale history as well as the active listings and the pending sales. The active listings show us our competition that the buyers will look at when they view our listing, and the pending sales show us what the buyers have recently selected.

An experienced agent can help you determine the right price and negotiate appraisal issues should they arise.


  Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.