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Hi everyone,
Longtime lurker of city data, and now have a real estate question I'm struggling to deal with. Hoping someone here might have some thoughts.
I am house hunting and in early discussion (via agents) regarding a house that isn't yet on the market but had been on and off unsold with multiple reductions over the past 2 years and will be coming back on soon. The house hadn't been officially priced yet when we saw it, but we were assuming they'd be considering something near the most recent listing price. The last reduction had occurred this past fall, was 25% below the original starting point, and sat for 3 months at that price until December when it was finally expired/removed.
When we asked for a price we were surprised to hear they were listing it above the original price; we thought maybe they were just uninformed about the market and provided a more reasonable price and a very close comp to back it up, at which point we were told they actually had a recent appraisal that had provided that relisting price.
After hours of research, my agent and I can't find any sales data that would support a much higher price than we are offering (in fact, the closest comps we can find would maybe even put it lower). Because it's a unique property and there aren't a lot of local comps for it, I've even expanded my search to a much larger search area and going back a full year and still can't find anything to support it. The only places I can find in that price point for a similar age/style house are larger, more updated, and have much more land. Houses immediately nearby that are in that price point are very large luxury homes. This is a very unique property but is not luxury and needs some updating.
My question is, how would an appraiser come up with a number that high when the closest comps are so much lower, and the house itself couldn't even sell for something much lower 6 months ago? Wouldn't that fact alone indicate the value of the house is much closer to the lower price point? Has anyone seen this before? I feel like I mostly hear about appraisals coming in low
People can get very strange ideas about property values.
If you want to put in a offer, do so. I don't think that raising the price after the house has sat for months is a good strategy myself, but who knows what advice their agent is giving them.
My question is, how would an appraiser come up with a number that high when the closest comps are so much lower, and the house itself couldn't even sell for something much lower 6 months ago? Wouldn't that fact alone indicate the value of the house is much closer to the lower price point? Has anyone seen this before? I feel like I mostly hear about appraisals coming in low
It's the appraiser's opinion based on many things, if they can't get an exact comp they can guesstimate. i"m sure if you are paying for the appraisal and it's not the bank it's looser standards so they can afford to fudge it. Same as an appraiser who sees a home being sold that is rented to a family who does not want to leave can make the numbers come in low and the sale will fall thru.
When you hear of appraisals coming low it's people who think their home is worth more than it really is or people who complain about it coming in low, same as they do about a bad product or experience. No one praises appraisers for coming in high or right on the nose.
Plus in many places have gone up in value in not only the last 6 months, but a lot in the last 2 years, so maybe it is worth more or worth what the high listing price was 2 years ago.
Make the 20% less offer and if they want to sell it you can buy it. No one else seems to want it.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Have you been inside? The appraiser has. Comps are a quick, simple way to come up with a ball park number, based on house and lot sizes in the same area. The condition, layout, and finishes inside can bump it up - or down. Depending on the location there may have been a lot of market improvement in the last few months. Here for example the value of homes went up 15.8% in the last year. That's an increase of $75,000 on a (rare) $500k starter home.
Also they could have done things that you can't notice such as gotten a new roof, new windows or had insulation or new wiring done that would increase the value over an older home without these improvements.
When we asked for a price we were surprised to hear they were listing it above the original price; we thought maybe they were just uninformed about the market and provided a more reasonable price and a very close comp to back it up, at which point we were told they actually had a recent appraisal that had provided that relisting price.
That may or may not be true. And in theory, the seller could be blowing smoke to his agent. Or his idea of "appraisal" is the CMA that the most optimistic smoke-blowing agent provided when the seller was interviewing agents.
Quote:
Originally Posted by sme82
My question is, how would an appraiser come up with a number that high when the closest comps are so much lower, and the house itself couldn't even sell for something much lower 6 months ago? Wouldn't that fact alone indicate the value of the house is much closer to the lower price point? Has anyone seen this before?
Who knows. I wouldn't waste too much time thinking about it, since your going to have to have your own appraisal, and the whole premise assumes they aren't dishonest, or fruit loops, and even if they aren't, assuming you get a mortgage your bank will send their own appraiser since they aren't likely to trust whatever the seller presents to them as the value.
Quote:
Originally Posted by sme82
I feel like I mostly hear about appraisals coming in low
Because a strong appraisal only hastens everyone to the closing table. Savvy Buyers tend to keep the appraisal to themselves unless its too low. If the appraisal matches, is $1K over contract price, or $10K over contract price, isn't anyone's business but yours and the lenders. If you're in negotiations regarding fixing or not fixing things, etc, why would you disclose if the appraisal came in $10K over contract price? A strong appraisal has never torpedoed a deal.
My question is, how would an appraiser come up with a number that high when the closest comps are so much lower, and the house itself couldn't even sell for something much lower 6 months ago? Wouldn't that fact alone indicate the value of the house is much closer to the lower price point? Has anyone seen this before? I feel like I mostly hear about appraisals coming in low
Makes no difference.
You make an offer. If they don't take it and you don't want to go higher, you walk.
It's that simple.
There will always be another house.
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