If I purchase a used house will rhe taxman screw me?

[suit-n-tie white guy]

whose appraisls are you using? THe builders? or RESALE data? Builders can wait years to sell their houses and never have to come down on their price. After the neighborhhod is finished and whenn you get actual resdients with short sales and motivated sellers only then will you get an accurate value for the neighborhood. The buidler will dictate the price until the neighbohood is finished. that is the appraisl your receiving.

[Aquitaine]

The appraisal I am referring to is the one conducted by an independent appraiser on the home we are about to close on. If I were paying 20% more than what the neighborhood is going for right now, I would know from the appraisal.

Then you changed your story to 'well, down the road, when there are short sales.' If there are short sales down the road then I would anticipate neighborhood value to decline. Buying a place in a neighborhood worth $x and then having the neighborhood go down hill is not even comparable to a realtor purposefully deceiving somebody into buying the most expensive house in the neighborhood. Anybody can make predictions on whether neighborhood value is stable, going up, or declining (and the appraisal does so, and tries to justify it) but those are short-term predictions.

The value for ANY neighborhood is whatever people will pay for it. The builder doesn't "dictate" it. It takes two to tango. The capacity for a neighborhood to decline in value after the fact is always present but short-sales and housing costs plummeting are not 'normal' behavior for any neighborhood.

[CarnivalGal]

Before a bank will ever approve a mortgage on a house, you are going to have to have an appraisal done (independent of the bank, realtor, and/or builder). If the appraisal comes in lower than the sales price the bank will not approve the mortgage. So this person you speak of and claimed paid entirely too much for his house 1) felt the house was worth that price or wouldn't have paid it and 2) had an independent appraiser agree that yes, in fact, the house was worth that much. And unless this was the only house this buyer looked at, he had to have an idea of it's value.

[EzPeterson]

And, hell, this mythical person you speak of may not have even USED a realtor.

-OR-

The sales data you're looking at is wrong.

-OR-

The builder is paying all prepaids and closing costs, which would come out to about $17K in this case, making their house effectively NOT the most expensive in the neighborhood, when you look at what their mortgage amount is, which really is all the buyer actually paid for the house.

My advice to you is to quit with the conspiracy theories, sit down with an actual realtor and not an MLS rip-off site. They'll be able to show you real comps that show closing cost credits and explain differences in value to you.

[suit-n-tie white guy]

if the appraisal is lower than the price of the house or do you mean the mortgage? iof i put down 60k for a 250k house and the bank agrees that its worth 200k then they wont care as long as you hit the 97.5 l/v ratio and they give you the loan. its your money to lose not theirs. Peopel moving here with cash from inlfated markets can easily overpay.

[TexasHorseLady]

If a house does not appraise for the amount of the loan, then, yes, the buyer will have to come up with the difference if they want the house enough to pay over appraised value for it. That house will then be one of the comps used to determine market value for future sales of similar houses (after deducting anything the seller might have contributed towards closing costs, repairs, etc. - there's a lot more than just the one figure that goes into figuring out what market value really is, you know - or do you?) It's ONE of the ways that the market value of houses in a particular neighborhood changes - market value being what someone is willing to pay for a house, after all. That you, personally, don't want to or can't pay a particular amount for a house is only a good indicator of market value if all the other buyers agree with you. If they don't agree with you, and the house sells, then the price paid for the house is market value for that house. That's why the settlement statement showing the price paid trumps everything else for the tax appraiser, because they can't argue with it. That IS market value, whether it's high or low, because that's what the actual market paid.

[EzPeterson]

Originally Posted by suit-n-tie white guy

Peopel moving here with cash from inlfated markets can easily overpay.

Where are these inflated markets that sellers are cashing in on? One of your first posts referred to a housing bubble - remember that? That's when home values in many markets crashed to historic LTV lows.

I give up, you're right. The system is a total sham designed to get you. Living out of your car is the only thing that can keep the balance of power away from shady sellers and realtors who have dedicated their very existence to ensure that you will never pay what you feel is the true value for a home.

[CarnivalGal]

Originally Posted by suit-n-tie white guy

if the appraisal is lower than the price of the house or do you mean the mortgage? iof i put down 60k for a 250k house and the bank agrees that its worth 200k then they wont care as long as you hit the 97.5 l/v ratio and they give you the loan. its your money to lose not theirs. Peopel moving here with cash from inlfated markets can easily overpay.

Yes, they will care. If you default on your mortgage, the bank will have to sell your house, so the actual value of it is important to them. Try putting 60K down on a house you are purchasing for 250K if the house only appraises at 230K and see what the bank says. Not going to happen, especially now that banks are not so quick to hand out mortgages.

And even if the bank would go ahead with the mortgage (which they wouldn't) the buyer would then know the actual value of the home and can change his mind.