Should I Share My Appraisal With My Realtor?

A home appraisal is an unbiased, professional valuation of a property, typically conducted by a licensed third party. Its primary purpose in real estate transactions is to provide lenders with an independent estimate of the home’s market value. While primarily ordered for lending, sellers often receive a copy during the sale process. A common question for sellers is whether to share this report with their real estate agent, a decision impacting strategy and communication.

Understanding the Home Appraisal

A home appraisal is an independent assessment of a property’s market value, conducted by a licensed appraiser. It is a key step in real estate transactions involving financing, ensuring the property’s value supports the loan amount and protecting the lender’s investment. Lenders require this assessment to avoid lending more than the home is worth.

The buyer’s mortgage lender typically initiates the appraisal process, often through an Appraisal Management Company (AMC) that assigns a state-licensed or certified appraiser. While the buyer usually pays for this service (ranging from $325 to $1,000), the report is technically owned by the lender. The buyer, as the borrower, is entitled to receive a copy before closing.

A formal appraisal differs from a Comparative Market Analysis (CMA) prepared by a real estate agent. An appraisal is a regulated, in-depth evaluation by a neutral third party for lending purposes. A CMA is a less formal estimate from an agent, used to help sellers determine a listing price.

Sellers do not automatically receive a copy of the appraisal, which is ordered for the lender and shared with the buyer. However, buyers often share the report with the seller, especially if the appraised value impacts the transaction, such as a lower-than-expected valuation. This sharing aids negotiation and transparency.

Reasons to Share Your Appraisal

Sharing your home appraisal with your real estate agent offers several strategic advantages, especially concerning financial aspects of the transaction. If the appraisal is lower than the agreed-upon sale price, providing this information allows your agent to address the “appraisal gap.” They can guide you on options like renegotiating the price, asking the buyer to cover the difference, or challenging the appraisal. This proactive communication helps prevent the sale from failing due to lending limitations.

Sharing the report fosters transparency and strengthens your collaborative relationship with your agent. Providing all relevant financial details demonstrates trust, enabling them to offer more informed advice. An agent who understands the property’s official appraised value can better strategize negotiations, ensuring both parties work with accurate market information. This leads to more effective decision-making.

When an appraisal meets or exceeds the sale price, it validates the property’s value and serves as a negotiation tool. Your agent can use a strong appraisal to reassure potential buyers about the property’s market value and justify the asking price, deterring lowball offers. This objective, third-party assessment adds credibility to the valuation and can solidify a buyer’s confidence, potentially leading to a smoother, quicker closing.

Sharing the appraisal also allows your agent to proactively address potential buyer concerns about financing or property value. If the appraisal highlights positive features, renovations, or unique selling points, the agent can emphasize these to other interested parties or during negotiations. This insight helps your agent anticipate and mitigate challenges, ensuring they are prepared to answer questions from the buyer’s lender or the buyer directly regarding the valuation. Such preparedness minimizes delays and maintains transaction momentum.

Reasons to Keep Your Appraisal Private

While sharing an appraisal can be beneficial, a seller might choose to keep the document private from their real estate agent. A primary concern is maintaining negotiation leverage, especially if the appraisal is lower than the listing or accepted offer price. Disclosing a low appraisal might inadvertently signal to the agent, and indirectly to the buyer, that the seller is prepared to accept a reduced price, potentially weakening the seller’s bargaining position and leading to a less favorable outcome.

Another consideration is the potential for the agent’s expectations to shift downwards based on a lower appraisal. An agent seeing a valuation below the asking price might encourage the seller to accept a lower offer, even if the seller believes the property is worth more. This could place undue pressure on the seller to concede on price, rather than pursuing alternative strategies. The appraisal is a snapshot of value for lending, not necessarily the ultimate market price.

The appraisal is primarily a document for the buyer’s lender, and the seller is not legally obligated to share it with their own agent. The agent’s contract with the seller outlines responsibilities like marketing, attracting buyers, and negotiating. Access to the formal appraisal document is not inherently required for the agent to fulfill these duties effectively.

Some sellers prefer to keep financial documents confidential, viewing the appraisal as private information pertinent only to the financing aspect. The agent’s role is distinct from a lender or appraiser; their expertise lies in market dynamics and sales strategy, not formal property valuation. Maintaining privacy allows the seller to control the narrative regarding the property’s value, especially if they disagree with the appraisal’s findings and wish to pursue a different strategy.

Addressing Appraisal Discrepancies

After receiving the appraisal report, sellers may find the appraised value differs from the agreed-upon sale price. If the appraisal is lower than the contract price, creating an “appraisal gap,” several options can keep the transaction moving. The seller might renegotiate the sale price to align with the appraised value, especially if market conditions suggest the original price was ambitious.

Alternatively, the buyer can cover the difference between the appraised value and the purchase price in cash. This allows the sale to proceed without altering the loan amount, as lenders typically only finance up to the appraised value. A common compromise involves the buyer and seller splitting the appraisal gap. In some instances, the seller may even offer to finance the difference directly for the buyer.

If the seller believes the appraisal contains errors or overlooks significant comparable sales, they can initiate a “Reconsideration of Value” (ROV). This formal request is submitted to the buyer’s lender, providing additional data or correcting factual inaccuracies. While the appraiser works for the lender, a well-supported ROV, often prepared with the seller’s agent’s assistance, can lead to a revised valuation. However, there is no guarantee of a change, and the lender may or may not approve a second appraisal.

Conversely, if the appraisal is higher than the agreed-upon sale price, this generally benefits the buyer by providing instant equity. For the seller, it typically means the transaction proceeds at the originally agreed-upon price. Unless specific clauses in the purchase agreement allow for renegotiation based on a higher appraisal, the seller is usually bound by the contract terms and cannot unilaterally increase the price. The ultimate decision on navigating these outcomes rests with the seller, often in consultation with their real estate agent.