Appraisal vs. actual sales price (Austin, Georgetown: days on market, foreclosure, mortgage)

[soontobetexan]

Curious about this ... how close, generally, should the purchase price and the lender's bank appraisal be? Most interested in a luxury home (we are buying in Georgetown) ... say it's under contract for $1,000,000 ... in this market, would you expect the appraisal to be about what the purchase price is, or more? Obviously, if it's less, in most cases, the sale will wind up not going through.

[orbius]

Low Appraisals - Dealing With Low Appraisals - When Appraisals Come in Low

Generally the appraisal needs to be very close to the purchase price or there will be serious issues.

[ROY DUBOSE]

does it really matter unless the contracted price is higher than the appraiser's number? -- if the appraiser's number comes in lower, unless protected in the contract, the buyer's pretty much SOL - it's my understanding too that the appraisal will stay with the transaction even if lender changes -- no mo funny bidness

i'd think your buyer's agent would have had a conversation about this issue when you put the offer together

[soontobetexan]

It's more idle curiousity, since Texas does not make sales prices public record, it's hard to get a sense of what properties actually sell for. I'm just wondering how close appraisals in the area reflect true market value of the properties, or how conservative the bank's appraisers are being in the luxury market in Georgetown (or Austin proper).

Here in the Northeast, appraisers had become so skittish since the meltdown that it was a struggle to even get close to market value on an appraisal and deals were blowing up right and left. The (useless) "value" sites, like Zillow, have gotten to the point where they are reporting numbers almost half of what properties are worth in some areas because they are automatically including foreclosure properties and can't tell the difference between the 1200 sq. ft. dump down the street and the newly renovated 2700 sq. ft. house with ocean views that are characteristic of some of the seaside towns here with a real mix of properties close to the water.

[motherofthree]

I have been trying to refinance this past month and the appraisal is what has been holding things up.

My next door neighbor sold his house last month. We have the same square footage, bedrooms, bathrooms, upgrades and lot size. I thought my appraisal would be close to that price but when it came back it was $25k lower. I was livid. I thought there is no way we would be that off. My new neighbor was gracious enough to give me a copy of her appraisal on the house. My broker used her appraisal to fight my low ball one and he got them to revise appraisal and it just came back $16k higher. He said he has never gotten an appraiser to revise an appraisal and he thinks it's only because I had my neighbors current appraisal.

My appraiser and my new neighbors appraiser used one house as the same comp to do the appraisal. The scary thing is the numbers are drastically different. Neighbor appraiser gave $20k for comp being less sq footage. My guy gave me $10k. Neighbor appraisal gave $3000 for having less bathroom and bedroom and my guy gave $5000. Shouldn't these numbers be the same? I mean this is the same house, same address they are using as a comp. I thought appraisers used a database so all the numbers were the same. Do they pick these numbers out of the thin air.

I have no faith in appraisals now. It's just a guessing game with them. As for zillow, my house is on there for $50k less than my new appraisal so I wouldn't use that as an accurate value.

I know that when the appraisal is lower than the sales price, usually the seller has to adjust their sales price when financing is involved.

[eichlerfan]

We just sold our house in CA. I can tell you from our experience that our appraisal came in 15,000 lower than the agreed sale price between us and the buyer. We ended up splitting the the price difference with the buyers. I hated to loose more money than we already had, but often in this market and dealing with appraisers, you do what you have to do. After all our buyers could have said forget it and walked away.

[AGA]

If an appraiser has a comp in his database from a personal inspection, it is alway much more reliable than trying to use MLS data for comparison. Realtors can be wrong, and list SF different that actual, bath counts SHOULD match and be consistant but there are those that STILL cannot distinguish between a full, 3/4, and 1/2 bath LOL. Other variable will be if there is a known seller/buyer concession on the sale price (excessive points, etc...) and so forth. As a former appraiser, I can say I would ALWAYS use a comp that I had personally inspected whenever possible...it was scary to see the differences between real info vs. MLS info.
Typically, in a pretty stable market the "value" of things like SF, baths, garage space, unfininshed area etc should be very comparable no matter WHO does it provided the actual hard data is accurate.
Even things like days on market can affect the market value, and in this economy DOM is getting longer and longer.
In my experience not only do the comps set value, but the voice of the contract is VERY LOUD. If someone is willing to pay a certain amount for a property that in itself is a type of market value.
And your appraisal will USUALLY end up pretty close provided there are no wacky things going on.
Beware the wacky things....For an extra 500 +/- out of pocket you can always get a 2nd opinion, but remember that the appraisal provided initially for a mortage is property of the mortgage company even though you pay for it. The mortgage company is the client and they do not have to share ANY info with you. (Unless the laws have changed drastically since I was in the business

On a million dollar property, a difference of 20,000 is only 2%...With those numbers, that is not as far off as it sounds...

[soontobetexan]

Interesting. Thanks for the response. We just got our results back and the house appraised for $15k more than the contract price we agreed to, so we are fine. I wasn't aware that the appraiser had the contract itself to refer to. I can see that it makes sense, but also that it sets the process more in a light of "is this house worth what they want to pay for it" vs. "how much is this house really worth."

[AGA]

Glad it all turned out in your favor! Good luck with everything