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The things she listed as "improvements" were actually just routine maintenance, not improvements. An old roof, windows, or flooring will deduct from the appraisal but having them in satisfactory condition is standard, not an improvement for appraisal purposes.
Had OP looked at a lot of houses before offering? It seems that if this house was so overpriced that OP could have found something just as good for a lot less.
I would think that OP's house, at that price point, because the price is a large percentage over fair market value, that any sort of shopping around at all would have revealed that the house was priced considerably higher than comparable houses.
This. It sure seems like OP thought the house was fairly priced when they made the offer.
Quote:
Originally Posted by Listener2307
Our home is not for sale just yet. We may sell in a few years; we already have a place to go, but not just yet.
My first call will be to an appraiser. I'll pay for it up front.
Then the realtor.
I am not going to be surprised when it comes to valuing our home.
It doesn't hurt (well except for your pocketbook) to hire an appraiser beforehand, but chances are unless you have a really unique property, an appraiser isn't going to give you a much different number than if you interview several qualified RE agents. And of course just because you get an appraisal beforehand doesn't mean the buyer's appraisal will agree with that one.
A house is worth what a willing buyer will pay. If a cash buyer pays the full asking price, that's what it is worth. It doesn't matter what you paid for it, what you owe on it or what you think it's worth. It doesn't matter what the assessor says or the appraiser says or what the comps come in at. The appraiser merely provides an educated guess for the lender to make a decision on how much to loan.
Quote:
Originally Posted by notrhj
Only in fantasy land.
In the real world title, banks, insurance companies go by the appraisal.
Sure it could be wrong, thats what second opinions are for.
Placing the blame on the agent or seller won't fix the issue at hand.
A rich buyer could certainly pay more than its worth.
A distressed seller could take less than its worth.
In the end you're at the mercy of price per square foot + land offset by similar comps.
Unless there was $37K worth of gold buried in the garage you're SOL when borrowing money.
The appraisal only matters if a property is going to be financed. Go to Arizona or Florida and a lot of properties will be cash purchases. I would imagine many aren't even appraised. We paid cash for our Arizona house. No appraisal needed or gotten. FMV of that house at the time is what we paid for it.
As always, it depends on how much you want the house and whether it's a buyer's or seller's market.
My natural reaction would be to play dumb and poor and say that you can't fund the difference so your position is that she needs to accept the appraised value or find another buyer (who will likely have the same issue). Although anyone can argue the result of the appraisal, it's done by an independent person and you, yourself, said that the comps were appropriate and that it all 'added up'. Therefore, this is saving you from overpaying on the house and you are in a strong negotiating position as it's difficult to argue with a professional appraiser and a gap that large is difficult to explain away. I would sit back and make it her problem. You just give her the facts and the ball is in her court to decide whether she wants to walk or accept the value that the independent appraiser arrived at.
With the ease of looking at homes online thru websites like Realtor.com, I'm very surprised that anyone is shocked by an appraisal. As a buyer or seller, it's easy enough to find comps yourself online. You can look at whole neighborhoods to find recently sold comps. I would never just walk into writing an offer without some serious diligence on the local comps.
And no, there is really no additional dollar value in a clean house and a half used up A/C. Curtains and door locks! That's ridiculous. Her realtor must be a total ninny for not telling her that you don't get added value from things that are standard equipment.
Under contract for a super clean meticulous house. We figured the appraisal would come back about 5- grand lower than contract price but were never expected 37,500! Seller and her agent are mad, my agent is blown away. House was 267,500 and appraisal came back at 230,000. The comps were good-no mistakes in the report. Both agents agree the comps were fair they just felt the appraiser didn't "value" her interior as well since she has such a spotless home with impeccable maintenance.
Seller wants us to change lenders and get 2nd appraisal. Then she offered to lower her price by 12,000 (255,000) and wants us to come up with the difference. We don't have it and even if I did I'm not sure I would do it.
I don't think even if we went through the trouble of getting a new lender how could a second appraisal come in 37,500 higher?
I should have known the red flags--seller was the "guide" for the showing, there for the inspection, provided a list of all her upgrades and improvements over the years and valued those at 80,000. Items included in that list were "front door locks", interior paint, tile flooring, replace AC 2009, Roof 2009, custom curtains" etc. She made comments during the showing that "if it doesn't sell, oh well...ill just snowbird" She is very emotionally attached. I should have followed my gut.
I get her anger and frustration. We just sold our home at a 90,000 dollar loss. I know what it's like to think your home has value and to be told it doesn't appraise for what you wanted. Her house is in boxes. I'm bummed that we went through the whole process and got excited thinking our search was over and our life could settle down again.
We offered to pay 10,000 more but her first response to the appraisal was .."well I'm not just going to give my house away" so I know the deal is dead. If the gap wasn't so big I'm sure we could have managed to make it work somehow.
Buying and selling can really suck.
Her agent should be telling seller that she has limited input on what the appraisal gives as value for her "improvements"...and she won't get the cost she put in as raised appraised value...
and doubtless a second appraisal will be using same comps so verdict like the same...
A foundation is either in good shape or not--
Whether it was a more expensive piered slab or just a contractor's floating slab makes no difference to the appraiser although there can be a wide range in price differences for those two types...
More expensive light fixtures rarely make a dint in an appraisal--
They either work or they don't...
Windows double planed likely get better price point than single pane--but more expensive choices --like with the screens in between glass panes--likely won't see big oomph in appraisal...
The appraisal process is the worst. What other industry let's the price of something be dictated by a third party - if you have a willing seller and willing buyer - that should be enough. Because lenders in the past lent large sums to folks who couldn't afford it, we all suffer this terrible process.
We are in the midst of this now in FL (near Clearwater). Appraisal came in $23K less than sale price. She listed we had zero updates in 15 years yet we have updated our kitchen, all bathrooms and upstairs air-handler less than three years ago. The appraisal was factually wrong. She spent more time petting my dog than taking notes on my home.
Now it's a waiting game to see how much the buyers (relo from our of state) will come up over the appraisal - hoping to meet in the middle. Buyers are starting a job here in less than a month, loves our house, doubt they want to start the process over. Due to relo, their lenders won't allow a new appraisal.
My realtor and their realtor have spent countless hours going back and forth all due to one faulty, factually inaccurate report. It's unfathomable.
OP - you need to decide how much the house is worth to you. If the seller doesn't work with you - you will have to make a tough decision to walk away.
The whole process stinks!!
The appraisal process is the worst. What other industry let's the price of something be dictated by a third party - if you have a willing seller and willing buyer - that should be enough. Because lenders in the past lent large sums to folks who couldn't afford it, we all suffer this terrible process!!
If you have a willing seller and a willing buyer, it IS enough so long as buyer is paying cash.
Unless you're visiting Lenny the Loan Shark, Virtually every transaction that involves lending money requires collateral to cover the loan (the new car industry is a slight exception to this in that they ignore depreciation on the vehicle if you have good credit.)
My question to you: If you were lending somebody hundreds of thousands of dollars, wouldn't you demand collateral to CYA and be reasonably assured you wouldn't lose your money? Sure you would. Banks have every right (and a fiduciary responsibility to their stockholders) to demand that collateral. I'm glad they've tightened up and wish like hell they hadnt loosened their belts 10-15 years ago.
But I'll agree that the appraisal should be accurate.
Had a bad experience with an appraisal for a refinance about five years ago when the market was down. The appraisal was horrible, so bad I wanted to slash the appraiser's car tires. I cried like a baby and got the lender to secure a second appraisal; they paid for it. It came back better but still off the mark. I had to come up with extra cash to make the refinance work, going from a 30-year fixed at 5.625% to a 15-year fixed at 3.375%. I realize not everyone can do it but I was able to and what a difference it make in debt reduction from that point forward until when I sold it for almost $200K more than the second appraisal.
Appraisers are stuck in history. I put them in the same category as city meter police who'll give you a parking ticket if your meter runs dry. Neither are on my Christmas card mailing list.
If you can't bridge the appraisal shortage gap with cash, or get the seller to adjust, then you'll have to move on and find your next dream home.
The appraisal process is the worst. What other industry let's the price of something be dictated by a third party - if you have a willing seller and willing buyer - that should be enough.
The auto industry.....ever hear of Kelly Blue Book? Do you think dealers just pull numbers out of the thin air for cars?
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