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.
My wife and I just purchased a home. The asking price was $255,000. Since the seller just finished a large renovation on the home and the traffic was huge we offered the seller full asking price and asked them to cover all closing costs. They countered by offering to pay half the closing costs and we pay half. Because all the cash we have is going towards the down payment (3.5% on an FHA loan) we don't have the $4000 for our half of the closing costs. We decided to wrap those costs into the loan by paying $259,000 for the house and the seller will pay the $8000 closing costs and get our half in the loan. However after researching a little I am finding that if the appraisal comes in under the purchase price ($259,000) we either have to renegotiate the contract or pay the difference in cash. The house is 2064 square feet and Just underwent a ton of renovations to improve almost every aspect of the house. We really love this house and don't want to lose it. Price per square foot comes out to $125. My questions are:
1) How close are appraisals and asking prices generally?
2) Is $125 per square foot a good value? We live in Boise, ID and the market is quite strong.
I don't have a ton of advice for you, but I just wanted to give you some perspective on my purchase. I just bought a house in Boise last month and paid $10k over asking (with no help on closing costs) at $187/sq ft, so comparatively you are way under on price/sq ft! I think I know which house you're referring to (Cloverdale area?) if so, I think you'll be ok on the appraisal, prices here are getting crazy!
The appraisers will most often meet the price the buyer is offering unless it is way, way off. They are all part of the same food chain and want repeat business through the sales people or lenders.
The appraisers will most often meet the price the buyer is offering unless it is way, way off. They are all part of the same food chain and want repeat business through the sales people or lenders.
That is not the case here. The value of a home given by the appraiser is independent of a seller's asking prices and is based on comps mostly. The house is worth what it's worth, and sometimes the seller just wants too much money, especially if the seller's agent isn't honest with them about what they can realistically expect to get on the sale of their home.
That is not the case here. The value of a home given by the appraiser is independent of a seller's asking prices and is based on comps mostly. The house is worth what it's worth, and sometimes the seller just wants too much money, especially if the seller's agent isn't honest with them about what they can realistically expect to get on the sale of their home.
Yup I'm in Houston here too and my last home I sold didn't appraise but we had it written into the contract that the buyer would pay the difference in cash if it didn't appraise and they did just that
The appraisers will most often meet the price the buyer is offering unless it is way, way off. They are all part of the same food chain and want repeat business through the sales people or lenders.
Yea, I found it kind of funny that the appraisal on the house we are closing on in a couple of weeks came in exactly at the price we offered. Not a dollar more; not a dollar less.
I lost a great townhome I wanted a few years ago because it didn't appraise for what the owner was asking for - she wouldn't come down in price and I didn't have the extra cash to pay the difference. Meanwhile, after it had been on the market a few months longer she wound up selling it for the appraised price. :-(
The appraisers will most often meet the price the buyer is offering unless it is way, way off. They are all part of the same food chain and want repeat business through the sales people or lenders.
This is the case in my market as well. Our house appraised for our contract purchase price to the dollar.
OP--I personally would not worry about something you have no control over. You made an offer and structured the deal in the way the worked best for you. Its up to the appraiser to determine what they think the house is worth, and hopefully they will not quibble over a few thousand dollars.
If the house does not appraise, you should be protected assuming you have a contingency on financing. If the bank rejects the deal based on the appraisal, you can cancel the contract and get your deposit back assuming the sellers did not modify the contingency when they agreed to fold the closing costs into the purchase price.
My wife and I just purchased a home. The asking price was $255,000. Since the seller just finished a large renovation on the home and the traffic was huge we offered the seller full asking price and asked them to cover all closing costs. They countered by offering to pay half the closing costs and we pay half. Because all the cash we have is going towards the down payment (3.5% on an FHA loan) we don't have the $4000 for our half of the closing costs. We decided to wrap those costs into the loan by paying $259,000 for the house and the seller will pay the $8000 closing costs and get our half in the loan. However after researching a little I am finding that if the appraisal comes in under the purchase price ($259,000) we either have to renegotiate the contract or pay the difference in cash. The house is 2064 square feet and Just underwent a ton of renovations to improve almost every aspect of the house. We really love this house and don't want to lose it. Price per square foot comes out to $125. My questions are:
1) How close are appraisals and asking prices generally?
2) Is $125 per square foot a good value? We live in Boise, ID and the market is quite strong.
Any help or advice would be great. Thank you!
Don't worry beforehand it's unnecessary. The Real Estate agent should have checked comps to make sure the home is worth the asking price or else you are all just wasting time.
If it doesn't appraise the seller will have to come down or miss out on the sale and wait for another buyer. If you really want the home you will have to find a way to come up with the $4K or tell the seller to offer the additional closing cost assistance to cover it.
Sometimes a low appraisal is the universe's way of telling you it's not the right house for you. I had on sale fall thru because of a very low appraisal, it was 20% less. I am pretty sure the reason was because the appraiser was the same nationality as the tenants who did not want to move out and gave him a sob story about not having a place to move to and 2 little kids. You can dispute an appraisal, we tried and the RE agent and the bank offered other comps and the appraiser refused to change his decision.
It was devastating at the time because I needed a place to live. but 3 months later I found a better home in a better area for the same price almost and it appraised for 12% higher than the asking price and due to recent sales up the block my home is worth 20% more than I paid for it 11 months ago.
Best of luck, I wouldn't worry is the home is in good shape and is a good market.
I agree, do not worry about what you cannot control. But.......Anytime a home sells over list price, I have to tell you it's a red flag. The house was listed at 255K. If the Realtor thought the value was 259K, it would have been priced there. What did your Realtor say? (Please don't tell me the listing agent is on both sides). For one Realtor to write the offer above list and another to recommend accepting it, that tells me there is room all the way around for renegotiations, or that both agents have hopes of renegotiations. The one thing in your favor is you are in the first time buyer price range, so it's likely the seller's side is prepared for a possible low report.
What concerns me about your comments is it sounds like there's zero room on your side for compromise. And that, alone, could have the seller putting the home back on the market. While waiting, look at your contract hard. What can you give up? Is the seller buying you a home warranty? (Do not give up title insurance). Are you required to get a survey? Can you take your interest rate up 1/4% and get a healthy lender credit towards closing? Unless the sellers added square footage, it's unlikely this home will sell higher than its comps.
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.
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.
