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I am already aware of what the property value is and it would be a cash transaction. Could the appraisal be used for leverage or could it end up coming in high and possibly kill the deal? The seller is suggesting it.
Does an appraisal help/hurt a buyer in a sellers market?
Flip a coin. It could do either. If the Seller is suggesting an appraisal, it sounds like they are not sure of the property's current market value. It also sounds like this is not a property which is listed for sale. Is it?
You may know what the value is to you, but you may not know what it could bring on the open market. It sounds like the Seller is just looking for assurance that they aren't selling way below market value.
To me, appraisals usually have little meaning when it comes to making an offer. Someone I know just lost out on buying an acreage parcel because they put in their offer a contingency for a satisfactory appraisal. I thought that was foolish--especially since it was a great price and an appraisal would have made little difference. That's a different scenario, but reliance on appraisals can do more harm than good as far as reaching a deal.
But...a high appraisal will only kill the deal if you're unwilling to pay the price.
Last edited by jackmichigan; 06-01-2021 at 09:53 AM..
Appraisal in this market is an interesting number.
However, the "price" of the home in this market (in any market, really) is what someone is willing to pay for it.
I would bet that many homes are currently trading well above appraised value. I wouldn't get too caught up in it as while you are fiddling around (as a buyer) someone will come along and top your bid by a silly amount (like a LOT of money higher) ..in cash !
As the seller it is basically a waste of time and money...in this market...unless, for some reason they are telling the buyer that their bid is low and they want to demonstrate, through an appraisal, that their pricing is correct.
It's not technically on the market, just listed on a local website. He isn't showing it yet since there are tenants there. That is correct, he is not sure what the home is worth, therefore he'd like to have an appraisal done. He thinks it's worth $50-$100k more because that's what "Zillow" is telling him about his house and the neighbors. The home was built in the 50's but was updated 10-15 years ago. When I go look at it, I pulled some comps to show him. If I am interested, I'd like to just get it under contract and not have to wait for an appraisal. That is, if he's willing. This market now is insane and I don't want to get into a bidding war either.
Regardless of what Zillow indicates, if I were the Seller I wouldn't trust your opinion of value either. I think he rightly gauges that you're trying to get a good deal.
You should want a professional appraisal to counter Zillow's appraisal.
No one can say whether it "hurts or helps" seller or buyer. It COULD instill a sense of reasonableness to have a third party provide an objective opinion of value.
So, get it under contract with an agreement to pay the price based on a professional appraisal.
You should want a professional appraisal to counter Zillow's appraisal.
No one can say whether it "hurts or helps" seller or buyer. It COULD instill a sense of reasonableness to have a third party provide an objective opinion of value.
So, get it under contract with an agreement to pay the price based on a professional appraisal.
Would you suggest to make an offer on the contract and give it to the appraiser? Of course, this contract would be contingent on the appraisal.
Who would be paying for the appraisal and/or picking the appraiser? In my area, I know of appraisers who generally give high estimates of value...and those who generally give lower estimates of value.
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I think he rightly gauges that you're trying to get a good deal.
