Home Buying in Greenfield>Question Details

Robert, Home Buyer in Waukesha, WI

Appraisal over listing?

Asked by Robert, Waukesha, WI Fri Jun 27, 2008

House I'm buying ended up with a purchase price $3k over asking due to seller wanting to recover some of the money from the downpayment assistance program I'm going to use. Now, after the inspection succesfully passed, I'm awaiting the appraisal to come back. Is it too rare for the house to appraise $3k over listing? The house is in a very good neighborhood (Greenfield) and it's in tip top shape.

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Congratulations Robert - you did good. Enjoy your new home!!
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0 votes Thank Flag Link Sat Jul 5, 2008
House appraised $1K over final sale price, so I'm good to go. Closing on August 15 :)
0 votes Thank Flag Link Fri Jul 4, 2008
This is very common around here and even the VA loans have been okay with it. Your agent thinks it is selling below value. If the house is in a good neighborhood and in good shape, as you say, I wouldn't worry about it.
0 votes Thank Flag Link Sun Jun 29, 2008
A few years ago this was common and very seldom was there an issue. Now that underwriters are scrutinizing appraisals more closely in hopes of protecting their investors, appraisers have become less generous than they had been in the past. For lenders this is also about how much money a buyer is putting towards a purchase these days. Foreclosure became an easy out in the past few years for some buyers when things got tough because they had no money invested in the purchase and nothing to lose monetarily if they walked away. This is why many lenders have done away with 100% financing.

In all of my years in real estate I have only had two occasions where an appraisal came in short. One incident happened 5 years ago and one happened a week ago. In both situations the buyers had asked for closing costs to be included in the purchase price and the buyers offered more than the asking price to receive the credit at the closing. Most interesting to me was that both loans were VA loans and the only VA loans I have been a party to in all my years in the business. In one case the seller and buyer came together to make up the difference. In the other situation the seller wouldn't budge and the buyer agreed to come up with the difference. Both deals closed, but I have come to wonder with the 2 for 2 record, if the VA is more conservative on behalf of the veteran than other institutions might be.

On a separate note, in our area, it is common practice for an appraiser to have a copy of the accepted offer. It has been done this way for several years now. Personally, I believe this is a disservice to the parties involved and our industry as a whole. The appraiser should be able to determine a value on a property without knowing the price that the buyer and seller have agreed on, and whether closing costs are included in the purchase price and being credited back to the buyer.
Web Reference: http://www.scwihomes.com
0 votes Thank Flag Link Sun Jun 29, 2008
Robert:
Thanks for writing. Sales data for closed transactions is public record. If your agent is working for you as a buyers agent, she could provide these to you at your request. You can always get the info at the appropriate government office; in our area, the register of deeds or county clerk would be able to help you. I hope everything turns out just as you'd like it! Best wishes.
0 votes Thank Flag Link Fri Jun 27, 2008
You can ask your agent to provide that information for you.
0 votes Thank Flag Link Fri Jun 27, 2008
Is there any way I could see what properties have sold for near by, or is that only accesible to the appraiser/realtors? My agent keeps saying not to worry because she thinks the house is underpriced. My bank did not mention anything about flags, just that they might ask someone else to cover the difference should it not appraise (seller or buyer).
0 votes Thank Flag Link Fri Jun 27, 2008
Robert,
It all depends. I am seeing appraisers and banks being very conservative in their evaluations, but, if there are comparable recent sales (last 1-3 months) that indicate a higher value you have the possibility that it could appraise over sale price.
I just had a home appraise higher than the sales price and the Buyer was very pleased.
Good Luck to you.
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0 votes Thank Flag Link Fri Jun 27, 2008
That's going to be a tough call. What the appraiser will be looking for will be similar type properties in the area that have recently sold and closed. If there are at least 3 that show you purchased the home slightly "under market" you may be OK. One question you might ask you lender is that the offer over asking pricing will or will not send a red flag up the underwriter on the mortgage. I've recently heard cases of this and then the lender won't approve the loan.
0 votes Thank Flag Link Fri Jun 27, 2008
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