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Made an offer on a home last week. Here are the stats:
Contract price - 395K
Preapproved loan - 300K
Down payment - 105K
3 bedroom/2 bath 1550 sq ft
Appraisal is scheduled for next week. 6 month Comps in the neighborhood are in the 380-410 range. Most fall under 395K. The higher comps are homes with a bit more square footage. Not a lot of comps with the exact square footage. Trying for apples to apples. No foreclosures in the neighborhood.
I have an out with my earnest money, so no big deal. But we really love this house and it will fit perfect with our current situation. This is a solid market, always has been. Great quiet neighborhood. Home values do well here, even during down years.
I’m afraid seller won’t drop to appraisal if in fact that occurs. We do have extra cash, but hate to have to use it.
Anyways, I have a bit of anxiety....lol My only hope is a fair appraisal and no low balling.
Print out the comps that you feel are actual comps and hand them to the appraiser.
It really helps if you do some research and share with them what you have found.
Doing comps requires you to understand pluses and minuses - which anyone can do, but takes some thought. Some houses have garages, some have basements - you have to be able to list the plusses (in this case) . . . and you can write a little narrative indicating why you think the comps are actual comps with your house.
Things to consider:
* Sq. feet of house
* Sq. feet of parcel
* Age of house
* Any remodeling (especially electrical, plumbing, roof, etc.)
* Particulars of neighborhood (quiet street vs. busy, nearby amenities, schools, etc.)
* Condition of house (great move-in condition vs. fixers)
* Any special zoning (i.e. horse property, flood zone, earthquake zone, etc.)
Be nice to the appraiser. Hand him your comps and offer him coffee or water.
Opinion is yes, we all get nervous when we're waiting for appraisal to come back, if it's close. If it comes back low, you can certainly try to negotiate for a lowered price.
However, with your big down payment, the bank is only loaning on $290K. When it comes right down to it, you're OK if appraisal comes back with anything over 290.
I have learned not to try to predict how it is in other areas… But at least in our area it would be highly unusual for the buyer or either agent to attend the appraisal or send comps before the appraisal is even done. Appraisers here are now chosen at random by a third-party so agents can no longer choose their appraiser. The buyer, the agents and the lender are now one step removed from the process. The goal is more accurate appraisals, not to lead the appraiser to the value you want. There is a process to seek reconsideration after the report is done, but I’ve never seen them change their appraisal yet.
Just to repeat myself ...there’s little to fear from this appraisal if buyer is really putting $100,000 down. I would hope to shout the appraisal should come back above the loan amount, which is what the lender is most concerned about.
CGab is correct. The primary purpose of the appraisal is to protect the lender.
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