Would you pay more than appraised price on rural property in this market?

[MotleyCrew]

Originally Posted by urbex

I'm putting this in the Phoenix forum instead of the general Real Estate forum, as I think these buying decisions are heavily based on area, and what may be true in one area isn't always the case every where.

So the place I'm in the middle of buying came in 30K short of the offer price, largely based on a discrepancy in square footage of the house due to an un-permitted addition. The seller's agent sounds fairly confident that the seller isn't going to want to come all the way down to the appraised price, and likely will want at least 5K-10K above the appraised price as they're saying that the appraiser valued way low. My loan officer did request a revalue based on several factors that didn't appear to have been taken into account, and we got that back this morning saying that the appraiser did account for them in the value, thus no adjustments are being made. Now we're waiting on the sellers response.

Due to the unpermitted addition, and several other factors, I'm seriously considering just eating my cost in inspection and appraisal and walking at this point, even if the seller does agree to come down in price, but it does make wonder about future offers.

Especially being that the house is in Wittmann, and it appears as if values/prices are rising out there...it doesn't appear that they're rising all that fast. Really looks to me that they're just barely increasing, enough to say they're not losing value right now. I'm thinking I'd be insane to even throw down an extra $1,000 in cash on top, much less 5K-10K. I have no plans or intentions of moving in the next few years, but seeing as how I don't have a crystal ball handy.... :P

Obviously, this is a personal decision, based on how badly I may want this place, but emotions aside...would you agree to pay more than an appraised value on a house today? I'm thinking it might be OK to throw in an extra few thousand on a house in the city, or one of the "up and coming" rural areas, like say New River, but I'm thinking it would be financially foolish to do this on a property in Wittmann.

We do a bit of work out that way and you will have to bring the unpermitted addition up to code if you make any changes, which will involve an architect or an engineer and perhaps even a civil if this addition opens a can of worms. I would make that part of the offer.

[urbex]

Originally Posted by MotleyCrew

We do a bit of work out that way and you will have to bring the unpermitted addition up to code if you make any changes, which will involve an architect or an engineer and perhaps even a civil if this addition opens a can of worms. I would make that part of the offer.

This is a large part of why I'm walking away from the property....

[ScottsdaleMark]

I think you made the right decision. I think it's right to I "walk away" from any listing I'm reading as soon as I see "unpermitted bonus room" or any kind of language like that.

In my subjective opinion, the kind of person who builds on to their home without a permit is someone who's either ignorant of the law, doesn't care, or is trying to cut corners/save costs. And I don't want to buy from someone who tried to cut corners as they might likely have also tried to do their own electrical or plumbing repairs to save money (likely safety issue for the next owner), or maybe did some substandard remodeling without the proper know-how, who knows.

Certainly some people do their own home repairs and do a fantastic job, but I've also seen a lot of messy work done. And I would think a real professional working on their own home, would still go get all the permits. So I don't want to generalize completely, but to me the "unpermitted" is just one of the red flags I like to go by.

[wpme]

Only a fool pays above appraised value, personally I will only buy if I can get it below appraised value

[blam]

Originally Posted by PHOENIXtreeguy

I would not pay more than appraised value for a piece of property. The western world has reached peak debt and asset values will fall little by little every year for decades.

For reference: Japan Prices back to 1983 levels

The same thing will happen here and in Europe. Buy property because you want it, not because it's a good investment. It won't be. Rest assured you will lose money on it as the years roll on.

Don't you think that happened because Japanese people stopped having kids decades ago? Population in USA will always grow.

[AZ Tracy]

When you are buying something, always think re-sale. What will be the issues when it is time to sell; backs to busy road, un-permitted additions, bad schools, etc. You'll have to deal with these issues at some point in the future. Is it worth it?

[autism360]

Some improvements that are made to a property do not lift values well since the home would be percieved as overimproved for the area. If you you put a movie room, bowling alley and indoor swimming pool in a 300k home you will not get very much of a return on your improvements in an appraisal but I would be willing to pay over appraised value for a home with these inprovements.