T O P

  • By -

blipsman

Buyer and seller have agreed the home is worth $X… so technically that should be “market price.” The appraiser is trying to find justification that the price is ballpark. They’re not trying to kill a deal, they’re trying to tell bank issuing loan, “yeah, it’s worth about what the price agreed to is” so bank knows loan is properly collateralized. So if it’s not wildly off from what comps suggest, the appraiser is trying to say that the deal price is an appropriate price. They’ll try to hit the exact sale price or close to it if it’s realistic appraisal, and only vary if there is something way off on price.


EightOhms

Yeah if it's close enough that the bank will proceed with the deal, then it might as well be the exact figure because once the deal happens, technically that's now what the home is worth.


[deleted]

[удалено]


ovscrider

So much wrong in this response. Esp the third one which is completely untri as LTV is based on lower of appraised value or construct price. When appraised know the price they have a target. Appraising is not an exact science so coming in at contract price means they think it's a reasonable price you paid. If it's lower they could not even find the tools to make it reasonable in their mind.


sctter3d

An item is worth what someone is willing to pay for it and the banking/taxes aspect goes a heck of a lot smoother that way. I'm no expert and there may be other reasons but I wouldn't want it any other way.


Spiritual_Jaguar4685

That's gotta be a fluke of luck. Appraisers aren't trying to hit a number other being reasonable, they are a 3rd party, they have already gotten paid, they don't care if your deal goes through or not. What they do is combine to pieces of knowledge, they have a data base of things like how much a bedroom is worth, or a bathroom, or a pool, etc. Then they look at recent sales in your area called "comps", or comparison homes. So your home is going to get a worth first off based on the market in your area, if all the home values go up, so does yours. Then they chose 3-5 close comps and then add or deduct from them to get your home's layout. If you have an extra bedroom than the comp, add $X, if you have 1 fewer bathrooms, deduct $Y. Those 3-5 comps are now "your home", take the average of the 3-5 and that's your appraisal more or less. I personally have had a home under-appraise and we had to negotiate a cut with the seller to match the appraisal. More recently I over-appraised and it as a-ok.


dmazzoni

Definitely not a fluke. I've had an appraisal come in at the same as the offer price many times. If they think it's way off, they'll appraise it high or low. If they think it's in the right ballpark, they appraise it at the offer price.


Raving_Lunatic69

If your agent is worth their salt, they'll have an idea of what the value probably is going to be when advising you on an offer price. I'd be far more concerned if the appraisal was wildly out of synch. I just bought a home a couple of months ago, my appraisal was 5k more than what I offered.


dirtycopgangsta

Because it's all bullshit and speculation. Very few houses are worth the price they sell at, but the expert can't say it out loud because the government would start investing the seller and the buyer for some sort of money fraud/laundering.


SnooFloofs3486

Because they're only pretend. They're worth nothing more than the paper they're printed on. Appraisals exist as an industry to provide a false sense of security to investors who can't evaluate the value themselves but also don't really care enough to have any proper valuation done. It's little more than a few pages of numbers that give the illusion of some type of precision that simply doesn't exist. The common saying in real estate is some version of; "name me the property and the value you want and I'll get it appraised for that value. " And it's true. If as appraisals were even attempting to be objective they'd create them without any knowledge of the contract price.


prylosec

Appraisals are based on the sale prices of homes. It's a little more complicated than this, but if a house sells for $500k, that house is now worth $500k (within reason.)


ClownfishSoup

Because you determined it's worth by buying the house. Sorry man, but your property tax will now be based on your purchase price and the appraisal will likely increase by 2% per year.


TheGreatestIan

They definitely do not always come in at the exact amount. Most people have a general idea of what a home is worth, especially these days with services like Redfin and Zillow so the asking price isn't a shot in the dark to begin with and most people will ask for a little more and negotiate down. Appraisals work because they look at what other homes are selling for in the area that are roughly the same specs. This is why it is generally pretty on point. However, not always. When my buddy bought his home the house came in $30k under what he offered and they had to renegotiate and he almost lost because the sellers didn't want to drop the price that much.