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We are looking at a house built in the early 1900's that appraised last year for $216,000 (which seems EXTREMELY low for the area), they have the house listed at $329,000 (a little high, but not too bad). If we were to purchase this home and have it appraised for our loan, where would the appraisal # fall? It can't go up more than 10% from the following year correct? FYI, I'm in TX. So if the house appraises at around $235ish, what would happen with the loan? The list price is roughly $100,000 more than the appraisal, does that effect anything? And as for paying property taxes, our tax basis would be the $235ish number, right? Which for us would be VERY low. I hate trying to calculate property taxes in TX, it was soooo much easier (and taxes were less) when we lived in CO.
Thanks for your help (even if I do sound like a complete idiot)
The appraisal would depend on the same comps that your agent (and, presumably, the listing agent) used to establish the price and your offer.
The tax appraisal is usually way off. I only look at tax appraisals when I want to see how much above the tax appraisal the majority of comps in the area are selling, on a percentage basis. Since Texas is a nondisclosure state, by law you don't have to tell the tax office how much you paid (though they will ask, trust me). So the bank's appraiser won't be going by the tax appraisal, either.
If the appraisal falls below the price you've agreed to, you would have the choice of foregoing the house, lowering the price (if the seller agreed - not likely if it was significant), or coming up with the remainder yourself.
By "remainder" do you mean the difference between the appraisal amount and the sale amount? For example, if we purchased the house for $300,000 and the house appraised for $220,000, would we have to come up with $80,000? By "come up with" do you mean cash, or an additional loan? Sorry for being such an idiot
I believe the 10% cap on increases in appraised value is specific to the owner, and when the property changes hands the appraised value can be reset at market value without regard to any cap.
We are looking at a house built in the early 1900's that appraised last year for $216,000 (which seems EXTREMELY low for the area), they have the house listed at $329,000 (a little high, but not too bad). If we were to purchase this home and have it appraised for our loan, where would the appraisal # fall? It can't go up more than 10% from the following year correct? FYI, I'm in TX. So if the house appraises at around $235ish, what would happen with the loan? The list price is roughly $100,000 more than the appraisal, does that effect anything? And as for paying property taxes, our tax basis would be the $235ish number, right? Which for us would be VERY low. I hate trying to calculate property taxes in TX, it was soooo much easier (and taxes were less) when we lived in CO.
Thanks for your help (even if I do sound like a complete idiot)
That 10% cap is for the current owner. If you bought at a higher price then that is the new valuation and the 10% cap starts with you at that price.
If you agree to $329K and the appraisal comes in at $235K then you owe the difference at closing as the loan would not be for more than the appraisal.
You want to make your offer contingent on an appraisal at or below the sale price else you have to pay the difference.
What Austin-Willy said is the correct answer. The current property tax appraissel is probably the result of capped limit from an over 65/disabled owner or just years of the 10% limit. If you purchase the home, the county may reset the tax appraissel value to the new purchase price and the 10% cap will start over again. Also realize that you can deduct the amount for the homestead exemption when figuring potential taxes.
There's the tax appraisal, and then there's the market appraisal, which are two different things if there are exemptions in place. That's why you'll sometimes see MLS information that says "estimated tax" and "actual tax" - the estimated tax is without exemptions based on the market value appraisal, the actual tax based on the tax value with them.
You want to make your offer contingent on an appraisal at or below the sale price else you have to pay the difference.
That, or you can have a financing contingency that says you don't have to put more than X% down. If I'm a seller, I would require that it be characterized as a financing contingency because I don't like the idea of letting the buyer walk just because they made a bad deal on the price, even if the end result (with a finanincg contingency) is the same.
[quote=HappyTexan;6459816]That 10% cap is for the current owner. If you bought at a higher price then that is the new valuation and the 10% cap starts with you at that price.
If you agree to $329K and the appraisal comes in at $235K then you owe the difference at closing as the loan would not be for more than the appraisal.
You want to make your offer contingent on an appraisal at or below the sale price else you have to pay the difference.[/QUOTE]
I think the last sentence was a misstatement. The sale price should be at or below the appraisal.
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