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But the 50% down offer only agreed to supplement up to 575 if appraisal was under 600
I know the bank would have given the mortgage for the 300k on house worth more like 550
But the buyers didn’t offer the supplement up,to 600
My husband felt if they were making an honest offer vs waving more money they would have guaranteed to supplement the full 300k needed
That's right, if it doesn't appraise, the buyer has to put more down, or you move on to the next. Lately here it's not an issue with all cash offers and no contingencies due to the lack of inventory.
Quote:
Originally Posted by loves2read
But the 50% down offer only agreed to supplement up to 575 if appraisal was under 600
I know the bank would have given the mortgage for the 300k on house worth more like 550
But the buyers didn’t offer the supplement up,to 600
My husband felt if they were making an honest offer vs waving more money they would have guaranteed to supplement the full 300k needed
Thanks for the inputs
If they are paying $600k, they are paying $600k. Bank lends them 300, they put up 300--no supplement. If the house appraises $50k lower it shouldn't matter, except that they end up owning a house worth 50k less than they paid for it (according to the appraiser). I can't imagine a bank agreeing to lend 50% of the value but not 55%. I've seen it happen many times with much smaller down payment... no addt'l money needed from buyer as down payment.
If they are paying $600k, they are paying $600k. Bank lends them 300, they put up 300--no supplement. If the house appraises $50k lower it shouldn't matter, except that they end up owning a house worth 50k less than they paid for it (according to the appraiser). I can't imagine a bank agreeing to lend 50% of the value but not 55%. I've seen it happen many times with much smaller down payment... no addt'l money needed from buyer as down payment.
No they put a rider on the contract offer that they would only supplement up to appraisal of 575
Meaning they would not pay the full 300
We —our realtor and ourselves—are pretty certain this house will not appraise at 600
Maybe around 550...
But the market is hot and people are paying over ask and supplementing
Those of you who state the appraisal is not a real stumbling block in getting us the highest take away may be in other states
Our contract offers “get outs” if appraisals come in light
And buyers are not mandated to supplement on their end if the appraisal is light
We just didn’t want to get that far and have to start negotiating again
Maybe we are too cautious but if offer 3 felt the house was worth 600K to get it from couple 1 they could have guaranteed...
Our problem is that we bought in new neighborhood in town that was built out basically
There has been no new construction in our area and sales in our neighborhood are few and many lots/houses have issues that can compromise selling...
Two streets back up to local city softball/soccer complex with big arc lights that can’t be avoided
There can be noise that goes late into the night when they have tournaments
When they are playing games there is lot of privacy so trade off
But there is smaller pool of owners who would like those houses despite their other positives
Those who said there are fewer buyers as price increases are right
And there are fewer companies buying for rental properties in this price range
But there are people with assets who can pay full price in cash
We could...
1. We got 1st to supplement to 5K over list
2. I think the house for various reasons is worth 580 but appraisals are more comp oriented not value oriented
Many homes in our small neighborhood have individual reasons that up or lower their value...
Technically not a tract development
3 the 3rd offer offered 600K but only to supplement to 575...5k under list
4 so we took the offer 5K over list which makes our price 145.52
The average sale price in my town which has way more older and smaller homes is $156 because of all-cash sales for over list
That isn’t a factor that helps during appraisal from what I understand
It is just a fact
First, there is huge demand for smaller 1 story homes. They cost more PSF to build and more to sell. I just sold my 2009 2600 sqft for $220 sf where other 2 stories in the hood may go for $160-180 sf. Bigger slabs, bigger roofs, more plumbing, ect. No stairs to climb by seniors.
Did you get those 3 offers in just a few days? If so why not wait and see if you could get one where they 100% waive the appraisal? If they are going to offer $600, they should have the resources to pay $600.
PSF can be finicky. Some costs in a house are fixed on a per house basis. Things like an electrical panel, a stove, water meter and lines, fridge exist in both a small and mid sized house. They don't cost more because the house is bigger. This is the reason why in apartments efficiencies are higher rent per sq.ft. then one bedrooms, then two bedrooms. If you've already paid for a one bedroom the extra bedroom isn't that much more because you aren't adding anything to cost except that one bedroom.
Then you have finishes quality flooring can range from $2 to $20 a sq.ft. pretty easily. Counters, light fixtures, etc. One of the common sayings in real estate is that 10-20 year old houses are the hardest to sell because they aren't discounted enough to sell as remodels, aren't close enough in to offer a commuting advantage, but don't have the "brand" new finishes on a house a mile down the road.
In your specific case I'd guess it's due to smaller size, age, and difference in school district reputation.
if I could understand the actual question, I'd address it. Since I can't, I'll attempt to provide a simple explanation of PSF - and it IS simple:
Example:
Two houses side by side. Built same year, in the same condition today, same bed and bath count. When built, both were 1500 sqft and had 2 car garages.
Then, one owner wanted more space, so they converted the garage to a family room, and they are 2,000 sqft.
Both hit the market the same day. Which one would be priced significantly higher PSF? The smaller house. Heck, which one do you think would be priced higher? The 1500 sqft one most likely.
Now, example 2 (which perhaps gets to the question):
Both homes go under contract, what are the appraisers going to say?
Both houses have the same "value" to the appraiser - that is condition, beds and baths, equal lots. Since most comparable sales in the area are "1500 SF plus 2 car garage" the smaller w/garage house is easy to comp.
The modified house is not. The appraiser has to go looking for 1800-2200 SF homes without garages. And those houses aren't going to get the same "value" from a big family room as they will from beds/baths/conditions.
The appraisers make a SF adjustment, but it's at ~ 33% of general PSF. And that's among similar-sized, not homes that are 25% smaller.
I just don’t believe all these houses are selling all cash
Or that appraisers are signing off on a 1800 sq ft house 30 yrs old intract neighborhood just like that house at 200 a foot and larger, newer can’t break 150
Almost everything in our market is appraising, even at 100k over asking. This is due to the "times" of the market, scarcity of available homes, and a crazy demand for each home.
Our listing agents are leaving the 10-20 over asking price rejected offers on the kitchen counter for the appraiser to review and realize demand is still out there for these homes.
Around here the only ones falling short are VA appraisals.
Almost all of the homes going under contract here are financed and contingent on appraisal. Money is cheap and people are taking advantage of their buying power.
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