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No much to say really..mentioned in another thread, I managed to land a home, but it's my first time waiving my appraisal contingency. To say I am nervous would be understatement; back in Oct I lost a house because it under appraised by 26k (it was shady with the sqf and the appraiser nailed it hard for that). But I am still gunshy, and seeing people missing the mark still has me worried.
From what I can see, I think I will be OK. We got it at asking (no crazy xK over to win), and the comps seem to line up.
I don't understand why you can't use homes ina different city, even though the city is .1 miles away (as it would provide another comp or two), but it is what it is...
I'm trying not to over think it, but am hoping to hear some honest feedback from neutral parties. I really like this place, but I don't have much to cover a gap.. not to mention this is the first offer I have landed since Nov.. the market is beyond insane here; I don't want to lose this opportunity either, as it's just right for my family down the line.
No much to say really..mentioned in another thread, I managed to land a home, but it's my first time waiving my appraisal contingency. To say I am nervous would be understatement; back in Oct I lost a house because it under appraised by 26k (it was shady with the sqf and the appraiser nailed it hard for that). But I am still gunshy, and seeing people missing the mark still has me worried.
From what I can see, I think I will be OK. We got it at asking (no crazy xK over to win), and the comps seem to line up.
I don't understand why you can't use homes ina different city, even though the city is .1 miles away (as it would provide another comp or two), but it is what it is...
I'm trying not to over think it, but am hoping to hear some honest feedback from neutral parties. I really like this place, but I don't have much to cover a gap.. not to mention this is the first offer I have landed since Nov.. the market is beyond insane here; I don't want to lose this opportunity either, as it's just right for my family down the line.
The house not only sold for $89K LESS money, but it was about 20% larger in square footage. I would say that you have good reason to be concerned. However, I'm a bit confused about your situation. You say that you waived the appraisal contingency, but you imply that if the house doesn't appraise for close to contract price, you won't be able to buy it. So what are you going to do if the house doesn't appraise and you don't have the money to make up the difference?
Problem is, it was now 7 months ago.. that's a long time in the market, especially this one. Compared to the other comps, which sold weeks ago, how much pull could that other home have?
And frankly.. what I do depends on the gap. If show the appraiser had a stroke and thought it was 200k, I would absolutely walk and leave the EMD. It it's close by a few thousand, I probably have enough strings I can pull to make something work. We waived it based on her recommendation, as we were going to lose the bid with it in place.
I'm bringing this home up with the realtor as well, but this is why I am looking for all the input I can get.
Problem is, it was now 7 months ago.. that's a long time in the market, especially this one. Compared to the other comps, which sold weeks ago, how much pull could that other home have?
And frankly.. what I do depends on the gap. If show the appraiser had a stroke and thought it was 200k, I would absolutely walk and leave the EMD. It it's close by a few thousand, I probably have enough strings I can pull to make something work. We waived it based on her recommendation, as we were going to lose the bid with it in place.
I'm bringing this home up with the realtor as well, but this is why I am looking for all the input I can get.
Considering it is right across the street, I'd say that it has a LOT of influence on the appraised value. Granted, 7 months may seem like a long time in this market, but I think that in evaluating the relative worth of both of those properties several years from now, the 7 months won't make any difference at all. I realize that appraisers don't look several years down the road, but YOU should. You're paying about 45% more than a house similar to yours right across the street, and the other house is about 20% larger. Let that fact sink in for a minute or two.
I don't mean to be critical about your situation, but sometimes it works out best if we DON'T get what we want. Getting a low appraisal on the one you're trying to buy might turn out to be a blessing in disguise.
There seems to be a confusion in terms. There is a bank's appraisal and there is current market valuation.
This house and the other houses that sold recently represent the current market valuation.
Banks are still making their appraisals on a conservative basis giving less weight to current sales as prices have shot up faster than anytime in history. During the pre-approval process, the bank will explain the appraisal process.
So the question remains... at the end of the day, should I be mentally prepared to walk away due to a huge gap? I would kill for a straight answer; I hate how there is so much uncertainty like this.. it should be straightforward and simple
So the question remains... at the end of the day, should I be mentally prepared to walk away due to a huge gap? I would kill for a straight answer; I hate how there is so much uncertainty like this.. it should be straightforward and simple
Depends on your definition of "huge", your ability to absorb any difference, and how badly you want this house.
If the appraisal comes in $25K below your offered price, is that "huge"? Can you make up that difference out of pocket? Are you willing to? How much do you have into EMD?
Not knowing any more than what you've told us all here, I would suggest that yes, you should be mentally prepared to walk away.
So the question remains... at the end of the day, should I be mentally prepared to walk away due to a huge gap? I would kill for a straight answer; I hate how there is so much uncertainty like this.. it should be straightforward and simple
No need to kill anyone. I'll give you a straight answer/opinion. YES, you should walk away if there is ANY gap between the appraisal and what your contract amount is. I believe that you have been caught up in the buying frenzy and this has interfered with your ability to see the big picture. It's better to experience the temporary disappointment of not getting a house today than it is to experience the long term regret/remorse of paying way too much for a house and having to live with that situation for the next 10+ years.
Back in 2007, MANY people were thinking exactly as you are today... that is "If I don't buy something today I'll never have a chance to buy." Well, history shows us that the ones who didn't buy at the top of the buying frenzy were the LUCKY ones. Many of those who did buy at or near the top, regretted it for a decade or more. Some/many even went bankrupt when they had financial problems and found themselves underwater on their house equity.
Considering it is right across the street, I'd say that it has a LOT of influence on the appraised value. Granted, 7 months may seem like a long time in this market, but I think that in evaluating the relative worth of both of those properties several years from now, the 7 months won't make any difference at all. I realize that appraisers don't look several years down the road, but YOU should. You're paying about 45% more than a house similar to yours right across the street, and the other house is about 20% larger. Let that fact sink in for a minute or two.
I'm going to disagree with you on the amount of influence this comp will have on the appraisal report. I'm not an appraiser nor do I play one on TV but my understanding is that USPAP requires appraisers to use comps no older than 12 months and if they're using a comp older than 6 months they have to justify it. An appraiser's job and duty is to assess the market value of the house and using a comp older than 6 months in a fast rising market is going to be hard to justify.
Also, markets go up and they go down. No one has a crystal ball and can say where the market will be when the OP is ready to sell and trying to time the market is a fool's errand. The OP may wait a year and get a similar house at a lower price and then sell in a TERRIBLE buyer's market and end up losing money just as easily as they could buy now and end up selling in another strong seller's market and make money. If you buy a home, be prepared as best as you can be for whatever the market is going to do and that's all you really can do. What the market is going to do between when the OP buys and the OP sells is really just noise to them and it doesn't matter.
Quote:
Originally Posted by Chas863
No need to kill anyone. I'll give you a straight answer/opinion. YES, you should walk away if there is ANY gap between the appraisal and what your contract amount is. I believe that you have been caught up in the buying frenzy and this has interfered with your ability to see the big picture. It's better to experience the temporary disappointment of not getting a house today than it is to experience the long term regret/remorse of paying way too much for a house and having to live with that situation for the next 10+ years.
If there are other recent comps that justify this price and it sounds like there are why should the OP walk away? Again, you have no idea what the market is going to be like when the OP sells or even what it will be like in a year. Definitely, the market is up right now. Will up be up more next year or down? Neither of us know. If it's up more next year OP is going to regret not buying now.
Quote:
Originally Posted by Chas863
Back in 2007, MANY people were thinking exactly as you are today... that is "If I don't buy something today I'll never have a chance to buy." Well, history shows us that the ones who didn't buy at the top of the buying frenzy were the LUCKY ones. Many of those who did buy at or near the top, regretted it for a decade or more. Some/many even went bankrupt when they had financial problems and found themselves underwater on their house equity.
The vast majority of my clients that bought in 2007 have made hundreds of thousands of dollars in equity in their homes. I even had one client who bought in 2007 and sold in 2008 and I sold their home for more than they paid for it.
You really have no idea about the OP's local market and you certainly have no way to predict what the market nationally or in the OP's local area will do. So, IMO your doom and gloom posts are not doing them a favor.
My hope is that they are working with an honest and knowledgeable and of course LOCAL real estate agent who can guide them on these issues.
I'm bringing this home up with the realtor as well, but this is why I am looking for all the input I can get.
Umm, shouldn't your realtor have discussed that home with you BEFORE you put in your offer???
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