Appraisals for foreclosed properties? (investment, sales, price, value) - - City-Data Forum

liloulou · 10-13-2009, 09:20 AM

I would imagine that the appraisal for a foreclosed property would be higher than the sale price. Is this correct thinking?

How much higher on average would be expected?

Thanks!

Goodpasture · 10-13-2009, 09:26 AM

Quote:

Originally Posted by liloulou

I would imagine that the appraisal for a foreclosed property would be higher than the sale price. Is this correct thinking?

Not really. It depends on what the intent or use of the appraisal is for. If we are talking about estimating the quick sale value then no. If we are talking about as repaired with a cost to cure, possibly. In the last month I have done two where the value of the house was the value of the site minus the cost of demolition and site preparation. The hundred thousand dollar house was actually worth less than $5,000

Quote:

Originally Posted by liloulou

How much higher on average would be expected?

If you are thinking there is a universal average that can be applied to every scenario, forget it. Find another investment vehicle where you can depend on averages. (when you find it, let me know)

Quote:

Originally Posted by liloulou

Thanks!

You are welcome

liloulou · 10-13-2009, 09:37 AM

Thanks Goodpasture... it would be for purchasing a home. In this example, we are purchasing a foreclosed property and I'm wondering if the appraisal should come in higher than the purchase price because we are paying slightly less than market value (from what I can tell anyway).

sweetrai · 10-13-2009, 10:45 AM

I think it all depends on how the listing agent/seller listed the property. If it was listed at what appeared to be a fair market value, then I expect that the appraisal may come in slightly above or at the listed price. The appraisal is going to take into account the condition of the house, so if the house needs major improvement, the appraisal will reflect this.

liloulou · 10-13-2009, 11:49 AM

Thank you sweetrai!

rjrcm · 10-13-2009, 11:58 AM

Quote:

Originally Posted by liloulou

I would imagine that the appraisal for a foreclosed property would be higher than the sale price. Is this correct thinking?

How much higher on average would be expected?

Thanks!

As discussed, it depends on the specific situation. In our market it's common for the sales price to be higher than the listed price due to competition for these homes. It's also common for the appraisal to come in lower than sales price in these cases. Either bank lowers price to appraisal, or the purchase is canceled.