Online Appraisals Offer Added Negotiating Power

A home is likely to be the largest purchase you’ll ever make, and it goes without saying that negotiating skills are a critical part of the purchase process. The fact is that while some people live to haggle, not everyone is a born negotiator and not everyone is familiar with the ins and outs of property values and the real estate market. Luckily for homebuyers, the increasingly popular AVM reports are offering home buyers a critical tool in the negotiation process.

If you don’t offer sticker price when you purchase a car, common sense tells you that you probably don’t offer the asking price when it’s time to purchase a home. The question many home buyers find themselves asking is how much is this home worth when the time comes to make a written offer? You don’t want to pay hundreds of dollars for a traditional appraisal before the sellers have even accepted your offer, but you also don’t want to pay more than “market value.”” Thanks to companies like ElectronicAppraiser.com, AVM reports are now providing home buyers with a solution to this dilemma.

An AVM (automated valuation model) pulls information from a variety of sources including as the local county public records, MLS databases, and other valuable sources to help determine the value of a home without having a live person physically appraise the property. An AVM is a sophisticated technology report, the product of an automated valuation analysis, and computer decisioning logic combined to provide a logical calculated estimate of a likely selling price of a residential property. These reports assume a subject property is in average condition for the neighborhood with no substantial improvements or deficiencies when compared to any other typical home in the neighborhood. By combining the selling prices of comparable homes in the area, the AVM is able to determine an estimate of a property’s fair market value.

What does this mean to you? If you’re looking to purchase a home and the AVM value comes in a lot lower than the asking price, you have negotiating power that you can bring to the table. Showing a seller the AVM report on their home in writing will go a lot further than a simple statement of “I don’t think it’s worth that much.” On the other hand, if the AVM comes in a lot higher than what the seller is asking, you can look into why the property is being offered at such a low price. If all is in order, you know you’re getting a great deal plus the benefit of instant equity.

Since many lenders are now also using AVM reports, ordering a report yourself can aid you in finding out whether or not the property you want to purchase will meet your lender’s qualification guidelines. For example, if you know your lender will use an AVM report to determine the property’s value and you know that your lender will only lend you up to 90 percent of the home’s value, you can figure out how much money you’re going to need to put down to qualify for the loan.

AVM reports are extremely economical, costing less than $30. They’re also very time-efficient. You can get the details of the report instantly online. When it comes to the purchase of a home, the early bird catches the worm, and the quick turnaround times offered by AVM reports are extremely beneficial.

In addition to negotiating power, AVM reports also give you an idea of local property values by letting you see what other homes in the area have sold for. While the system isn’t foolproof, it’s a great point of reference to start from. AVM reports won’t figure in excessive damage or extreme market conditions (such as sudden spikes in real estate values), but the report will give you a fairly accurate idea of what the market value of the home you’re interested in purchasing is, giving you the power you need when it’s time to negotiate.

By Jeff Herman, Affiliate Manager ElectronicAppraiser.com

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