U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Texas > Austin
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 04-29-2015, 12:06 PM
 
Location: Round Rock, Texas
10,769 posts, read 10,176,929 times
Reputation: 14284

Advertisements

Quote:
Originally Posted by Eastcoasting View Post
It's not exactly as simple as that, not all appraisers are created equal.

Some will over value, some will undervalue (especially if they aren't local) some will get it just right.

So for the right house at the right time with an eye towards staying in a house for a long time I can see paying over appraisal if that's what needed to happen to close.
No, all appraisals aren't considered equal. Some are more conservative than others. But, at least from my experience, they tended to be a decent barometer and were often spot on. My house appraised for pretty much what I thought it was worth (having considered neighborhood growth rate and sales). I have never paid more than appraisal (especially having to pay for any difference) and I never will.

Quote:
Originally Posted by austin-steve View Post
Define "over pay".
Overpay = pay more than what a professional thinks it is worth. Removing such things as personal emotions and looking at a home and area objectively. There are a lot of good areas to buy. If the bank is trying to protect its financial interests by sticking with the appraised value, why wouldn't I?

Quote:
Originally Posted by austin-steve View Post
What would you do instead, if you truly needed to buy a house, were fed up with renting, and valued a range of geographic locations experiencing high demand? What is Plan B for that type of buyer?
What would I do? Have several backup areas, not put all of my eggs in one basket. I am never dead-set on one, or maybe two areas. In our home search, while we personally preferred to stay in one area, we had no qualms about widening the net and looking at other areas. To be clear, I did have that feeling of "I want this house in this area." I felt that way about our current house. In fact, we thought we would end up not getting the house. But we would never think to go above and beyond FMV. I strongly believe that sometimes, things are just meant to be yours. Whether you get it or not at that very moment is one thing, but you will get it. I am not going to be desperate and so emotionally charged that I am going to pay 10-20,000 more than appraised value. Sure, Austin is on a tidal wave right now, but I don't hedge all my bets on that. There's no way I'll be adding more money over professionally appraised value (vs. tax value). Will I pay more than asking? You betcha. Above appraisal, NO. But hey, if that's what some people are willing to do to get a house, good for them. I'm sure they feel comfortable with their decision, as I am comfortable with mine.

Last edited by riaelise; 04-29-2015 at 12:46 PM..
Reply With Quote Quick reply to this message

 
Old 04-29-2015, 04:04 PM
 
Location: The People's Republic of Austin
5,184 posts, read 5,737,833 times
Reputation: 2553
Quote:
Originally Posted by riaelise View Post
But we would never think to go above and beyond FMV. I strongly believe that sometimes, things are just meant to be yours. Whether you get it or not at that very moment is one thing, but you will get it. I am not going to be desperate and so emotionally charged that I am going to pay 10-20,000 more than appraised value.
I'd love to see a breakdown of folks that make above FMV offers - relos vs. move-ups. The move-ups have the luxury of time, because they are in a place. The relos are a different story. They have to get into something, and many times just get fed up with losing house after house.

Any of the RE agents have any thoughts on that?
Reply With Quote Quick reply to this message
 
Old 04-29-2015, 04:17 PM
 
Location: Austin, TX
16,721 posts, read 40,971,481 times
Reputation: 9204
Quote:
Originally Posted by AustinDude360 View Post
Hello,

I read up in a local Austin real estate blog that buyers are being advised to waive appraisal when making an offer on a home to strengthen their positioning. While I recently purchased and actually paid a decent amount under appraisal, I'm curious if this is the activity we are seeing with desperate and cash buyers.
I sold a rental property of mine last summer. After only 3 days on the market I had 5 offers, 3 were for more than the asking price. The highest offer I rejected because it was contingent on an appraisal and I did not think it would appraise that high. I accepted the second offer for slightly less $, it was a cash buy, no appraisal needed, closed quickly to out of town buyers who relocated from Houston.
Reply With Quote Quick reply to this message
 
Old 04-29-2015, 04:26 PM
 
Location: Downtown Austin
6,100 posts, read 15,385,378 times
Reputation: 5081
Quote:
Originally Posted by scm53 View Post
I'd love to see a breakdown of folks that make above FMV offers - relos vs. move-ups. The move-ups have the luxury of time, because they are in a place. The relos are a different story. They have to get into something, and many times just get fed up with losing house after house.

Any of the RE agents have any thoughts on that?
It doesn't really break out like that, from what I've seen. Many move-up buyers are getting top dollar for the home they are selling, and thus understand they will be doing the same for the one they are buying.

Many relos give up and rent. Some jump high to win. There is no trend.

The winners are mostly determined in this order:
1) Cash
2) 20%+ downpayment
3) all others

Not by their their circumstance or category.

The real question is, do those philosophically opposed to paying "too much" (over bank appraisal) benefit from their stoic resolve?

My assertion is no, they are harmed by their stoic resolve except in one circumstance only, which is if they hold out right before a market peak followed by a dip. So, for example, a June 2007 buyer who gave up at that peak was rewarded by that decision if buying in 2008-2010, as he had more to pick from at the same or better price.

We will hit a peak in this market too. Timing it is tricky though. The vast mojority of those who wait and hope for a timing bet will be harmed by the decision to do so, while the vast majority of those who pay "too much" will be rewarded immediately, or within the year by appreciation catchup.

Steve
Reply With Quote Quick reply to this message
 
Old 04-29-2015, 04:46 PM
 
Location: Round Rock, Texas
10,769 posts, read 10,176,929 times
Reputation: 14284
Quote:
Originally Posted by austin-steve View Post
It doesn't really break out like that, from what I've seen. Many move-up buyers are getting top dollar for the home they are selling, and thus understand they will be doing the same for the one they are buying.

Many relos give up and rent. Some jump high to win. There is no trend.

The winners are mostly determined in this order:
1) Cash
2) 20%+ downpayment
3) all others

Not by their their circumstance or category.

The real question is, do those philosophically opposed to paying "too much" (over bank appraisal) benefit from their stoic resolve?

My assertion is no, they are harmed by their stoic resolve except in one circumstance only, which is if they hold out right before a market peak followed by a dip. So, for example, a June 2007 buyer who gave up at that peak was rewarded by that decision if buying in 2008-2010, as he had more to pick from at the same or better price.

We will hit a peak in this market too. Timing it is tricky though. The vast mojority of those who wait and hope for a timing bet will be harmed by the decision to do so, while the vast majority of those who pay "too much" will be rewarded immediately, or within the year by appreciation catchup.

Steve
I am one of those people and I have not been harmed whatsoever.... In fact, I guess we're lucky. We got what we wanted and we didn't pay over the bank appraisal either. And it wasn't because of lack of interest because I know for a fact that there were lots of people clamoring over the house. As a move up buyer, we made a pretty decent amount of coin. While we paid more than years past, even more than last year, we still kept a good amount of that money in our pockets and didn't spend it on a house. I'm not a real estate pro by any means...just a lucky consumer. I've bought low and sold high both times that I/we sold. While I am not buying low now, I am in a decent place (which is at appraisal). If the appraisal of this home came below the contract price, I would've backed out. Sure, I might be sad about it. "But there's always another house".

As for this appreciation train, it's going to reach end of the line at some point. I think it's equally folly to think that it will just keep going stratospherically high. i.e. you pay $500k for a $450k house and expect to get $600k two years later. There are plenty things that will check prices. The people who are laughing all the way to the bank are those who bought ridiculously low (i.e. $200k-$300k)..not the people who are buying $400k+ now. I'm in that latter group. For the first time I'm buying during a "high" and while I am by no means worried, I like being at the valley rather than the peak. But now is now.


SCM is right in that relos don't really have that luxury.
Reply With Quote Quick reply to this message
 
Old 04-29-2015, 05:55 PM
 
Location: Downtown Austin
6,100 posts, read 15,385,378 times
Reputation: 5081
Quote:
Originally Posted by riaelise View Post
I am one of those people and I have not been harmed whatsoever.... In fact, I guess we're lucky. We got what we wanted and we didn't pay over the bank appraisal either. ...
Your putting a lot of validity in a bank appraisal, as if it's the gospel. Do you think bank appraisers set prices that reflect a more accurate market value than does the market itself? Why do you believe that?

Having personally encountered a lot of bank appraisers, and in dealing with them regularly to let them in tenant-occupied homes for client refis, I can with certainty share with you than a good portion of them are pretty stupid. Many rival the dumbest Realtors we encounter, and that's saying a lot, because there are some really dumb idiot Realtors running around in every hot market everywhere.

So, you're basically letting a major life decision about whether to "stay or quit" in a real estate transaction that has already cleared inspection period be dependent on the opinion of an anonymous low income dingbat, who very well could be from Dallas and not even know where Steiner Ranch is (real life example), and who often is so buried with refi work that he/she has 3-5 appraisals a day to crank out?

Not the recipe for a quality product. But you trust it as the final word on value, enough that you'd walk away from a perfectly good house over that alone?

Steve
Reply With Quote Quick reply to this message
 
Old 04-29-2015, 10:31 PM
 
175 posts, read 156,923 times
Reputation: 420
Quote:
Originally Posted by riaelise View Post
There's no way I'd ever overpay. Period. I'll find a house somewhere else.
Paying over the appraisal value is not necessarily overpaying, at least versus the market. This scenario is not uncommon in fast-rising markets.

Whether or not it's a good idea is another story.
Reply With Quote Quick reply to this message
 
Old 04-30-2015, 02:05 AM
 
Location: home
1,235 posts, read 1,129,595 times
Reputation: 1068
Quote:
Originally Posted by austin-steve View Post
What would you do instead, if you truly needed to buy a house, were fed up with renting, and valued a range of geographic locations experiencing high demand? What is Plan B for that type of buyer?
I would reassess what I valued, and look at close-in marginal areas, and learn to at least temporarily accept the trade-offs - like school quality and crime. I would then do what I could to gentrify the area and make it more acceptable for people like myself. I'm fully aware that I will get roasted by some for that attitude.
Reply With Quote Quick reply to this message
 
Old 04-30-2015, 07:23 AM
 
Location: Greater NYC
2,907 posts, read 4,921,084 times
Reputation: 3872
Quote:
Originally Posted by austin-steve View Post
Your putting a lot of validity in a bank appraisal, as if it's the gospel. Do you think bank appraisers set prices that reflect a more accurate market value than does the market itself? Why do you believe that?
Exactly. No one I know takes bank appraisals that seriously for all the reasons you previously provided. Treating them as the gospel truth is misguided. Most of these appraisers know very little about the area they're appraising in, I hear this repeatedly too so I'm guessing it's not a rumor. Bank appraisals are just a necessary evil put into place to cover the bank's *ss and only exist to help the bank.

Last edited by Idlewile; 04-30-2015 at 07:37 AM..
Reply With Quote Quick reply to this message
 
Old 04-30-2015, 07:35 AM
 
645 posts, read 494,954 times
Reputation: 527
Quote:
Originally Posted by austin-steve View Post
The winners are mostly determined in this order:
1) Cash
2) 20%+ downpayment
3) all others
I have known three friends along with my husband and I who purchased within the last year who were in the 3) category who won their homes because they wrote the sellers a note explaining a little bit about themselves. I thought that was frankly ridiculous to have to do when my friends first advised me to write one, but we ended up doing the same thing and because of who the owner of our house was (a non-profit who wanted to see a young family with commitment to the neighborhood), it is the reason we won the house also. In our case, we were the first offer, it was a competitive offer above asking but NOT above appraisal, and the seller took it.

In my friends' cases, they were part of multiple offer scenarios and theirs were not necessarily the highest offers. In one case, the house did not appraise for the offer and the owners lowered the price by $5k to let the contract continue. This house is three blocks down the street from mine and it is a lovely home.

My other friends who successfully won houses this way were a single mom who is a special education teacher in LISD, a young couple where the husband is an Iraq veteran and a firefighter, and another newly-married young couple with a baby buying their first move-up house. They all wrote a narrative for the seller explaining why they wanted the house, any details of how long they'd been looking, and included pictures. This doesn't always work, but it's important to remember the human element in real estate transactions.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Options
X
Data:
Loading data...
Based on 2000-2016 data
Loading data...

123
Hide US histogram


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Texas > Austin
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top