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It's not flawed. If one buyer was clueless and paid too much then that sale will be an outlier when analyzed against other comps and therefore will have minimal impact on pricing in that area. If on the other hand the buyer was accurate then there will be other similar comps that reflect similar prices.
Isn't that what I said? You're contradicting yourself.
Isn't that what I said? You're contradicting yourself.
No I'm not. I said a house is worth what someone will pay for it. In the scenario you mentioned, the outlier would be worth more for whatever reason. Maybe it's a particularly appealing house. But if it's an outlier it just wouldn't affect the surrounding property values all that much.
No I'm not. I said a house is worth what someone will pay for it. In the scenario you mentioned, the outlier would be worth more for whatever reason. Maybe it's a particularly appealing house. But if it's an outlier it just wouldn't affect the surrounding property values all that much.
And now you're contradicting yourself again.
Appraisers set the value of homes. Stupid buyers have nothing to do with it.
I guess if enough stupid buyers get together in an area, it will cause house prices to go up, but in the majority of cases, a house value is definitely not what "someone" will pay for it, but what most "someones" will pay for it.
I guess if enough stupid buyers get together in an area, it will cause house prices to go up, but in the majority of cases, a house value is definitely not what "someone" will pay for it, but what most "someones" will pay for it.
Isn't this the case in the current market place, as you keep calling it a bubble?
Appraisers set the value of homes. Stupid buyers have nothing to do with it.
I guess if enough stupid buyers get together in an area, it will cause house prices to go up, but in the majority of cases, a house value is definitely not what "someone" will pay for it, but what most "someones" will pay for it.
Sale prices set the value of homes. Appraisals are one factor that can influence what the final sale price is, but they do not set the value directly, the final sale price does.
Sale prices set the value of homes. Appraisals are one factor that can influence what the final sale price is, but they do not set the value directly, the final sale price does.
^^^ This would be the correct answer.
Appraisals are just that, an appraisal. An estimate. Should a buyer decide to pay more than the appraisal price (via increasing the down payment so the loan amount does not exceed the lender's appraisal price limit or increase the amount of the loan to match appraisal) the home would be judged as valued at purchase price but, noting, at or above above the appraised value. The opposite is also true, if you purchase a home at less than appraised price, the home value still remains the purchase price but again nothing more than as a notation, at below appraisal price. At the end of the day you're welcome to feel good or bad about paid above or below appraisal, but you've still paid the selling price, which at that point is the value of the home regardless of appraisal.
LOL. Who cares about this Wells Fargo product. You can get an FHA loan with 3.5% down, or a USDA loan with 0% down. VA loans can be had with 0 down. Something like 97% of the geographic area of the United States falls under USDA lending territory. If you don't mind paying a higher rate, you can get enough points back to you so that you don't have any closing costs either. Yep, you can buy a house with 0 out of pocket expense. If you want a low rate, then all you'll have is your closing costs out of pocket.
To be honest though, if I were young, I wouldn't buy a house right out of college. Find out where you want/need to work, see how it fits, and go from there. You don't want to get tied down to one spot, when you could be somewhere else where you're making more money or having more fun. The only property a 22 year old should buy is an investment property. And if it doesn't bother them, buy a 4 unit apartment building, live in one, and rent the other 3 out. You get owner-occupancy financing, rinse and repeat every few years. You could have half a dozen apartment buildings by the time you're 30.
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