House value

[Qacer]

I don't have any insight regarding house appraisals. We are in the process of buying a home, but have been told by friends that we may not be making the best offer on a house. Our realtor thinks that the offer is reasonable, and that we are protected by a clause in the contract that states that the house must minimally appraise at the offer price.

Does anyone have any lender insight regarding appraisals?

Our realtor said that lenders have been very cautious, and that they take into account a declining market into the appraised value. This would make sense, but at the same time, if I were a lender appraiser and have determined that a future borrower is a safe investment, then I would not have a problem putting the minimal appraisal value at the offer price even if the actual appraisal value is a few thousand dollars smaller.

What do you think?

 

[BoomerD]

Check the house on zillow.com and see what they have it valued at. While their numbers aren't always totally accurate, it may give you an accurate estimate. THEN, when the lender does an appraisal, you'll have something to compare to.

 

[Qacer]

Sounds good. The house currently has a Zillow estimate of $199k, which is not too far off from our offer price. But others have said that many houses on Zillow have over-estimated values. The county's current appraisal value for the house is about $177k, but that is considered an under-estimated value by many.

 

[SearchMaster]

You can't go by the county's estimate. They generally under-appraise to (a) prevent a bunch of complaints and appeals by the taxpayers, and (b) to give some room to raise taxes without raising the millage rates.

What does your realtor say? If you have a good one, they should tell you whether it's a fair offer for the neighborhood. I don't know if it's still the case, after all the recent mortgage/lending problems, but appraisers used to try to match the appraisal to the purchase price.

 

[QED]

If your realtor is any good, she (he?) should already have shown you a list of recent home sales in the neighborhood, which will give you a good idea of what the home is worth. The lender's home appraiser will do pretty much the same thing, but may also come out to the home to compare it's condition with the other recent sales, and make adjustments based on the relative condition, age, size, etc. I would be more apt to believe the lender's appraiser than I would some stranger off the street about home values-- as long as you keep in mind that (especially in the past), the lender has a built-in incentive for the home to appraise for what you are purchasing it for. This is now somewhat countered by a sudden new-found desire by lenders to be more stringent in how homes are appraised.

Don't over rely on Zillow-- it can be pretty accurate in an area with a lot of cookie-cutter homes with a lot of recent sales, but the more diverse the housing market is in your area (and the more sparse the sales data), it can wildly fluctuate. But one very useful feature of Zillow is it will actually show you recent sales in the home's area-- take a look at them for yourself and see if they truly are comparable to the home you are purchasing. And absolutely don't rely or use the county's tax assesment either-- appraising a home for tax purposes is completely seperate than appraising a home for lending purposes.

 

[robphelan]

ditto on zillow. maybe over the past couple of years they have gotten better, but when I was in the market, their numbers were way off.

 

[Saint Nick]

Here in SE Nebraska appraisers have been going around to houses and raising how much houses are worth to increase taxes.

 

[EagleKeeper]

You realator represeentive should be able to show you a comparative analysis of what homes have sold for in the area.

Do not use what homes were listed for.

From there, you know what the actaul market thinks of the property that you are interested in. then use you judgement - part is how desperate the sellers may be based on how long the property has been on the market and how many times they may have lowered the asking price.

 

[dullard]

Appraising a house is a tricky field with lots of grey areas. The housing market isn't perfect, sometimes people overpay or underpay, the true prices are conceiled in layers of kickbacks and fees, etc. Thus, you are trying to measure something that can't be accurately measured.

The best answer for the house's value is that the house is worth what someone will pay for it. That someone is you, Qacer. Of course it also depends on if the sellers agree to sell at that price. So many appraisers that I've seen just appraise it right at the exact dollar amount that you offered for the house (I've seen it first hand with me and all of my friends, even those who gave non-round numbers for the house value). Sadly, that tells you and the bank nothing new. Is your offer really fair?

A good appraiser would be able to tell you if it is fair and not just default to the selling price that you picked. They do this by comparing many similar recent home sales. But, often there aren't many recent sales to use. Thus, even a good appraisal should be taken as a rough estimate, probably +-10%.

At this point, your realtor is not your friend. Both realtors (buyer's and seller's) in most cases make more commission the higher the selling price of the home. Thus, do NOT use the realtor for advice on the value of the home.

 

[meltdown75]

appraisal and assessment are two different things. just thought i'd throw that out there.

Originally posted by: SearchMaster
You can't go by the county's estimate. They generally under-appraise to (a) prevent a bunch of complaints and appeals by the taxpayers, and (b) to give some room to raise taxes without raising the millage rates.

do you mean the county's "assessment"? if so, that's terrible practice. perhaps the assessment bodies of the "county" in question aren't bound by legislation like the provincial assessment authorities here in Canada. there has to be some modicum of fairness involved, which is why establishing a truely fair and accurate market value is the ultimate goal for assessment bodies. in short, market value = fairness across the board.

so how are taxes "raised" when the property is "under-appraised" and the mill rates aren't bumped up?

prevention of "complaints and appeals" should NEVER be the goal for assessment bodies. the input of property owners is something that is relied upon to correct errors and to reflect the uniqueness of certain properties. Mass appraisal (ie. assessment) is not an exact science. The public's input is always sought. If there weren't any complaints or appeals, something would definitely be wrong.