Financing in 08071>Question Details

J C, Other/Just Looking in 08071

I'm interested in a property that is listed for 119,900 but only appraised for 53,000.

Asked by J C, 08071 Tue Jun 2, 2009

Does anyone know if financing will be an issue? Can a bank lend more than a property is appraised for?

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Determination of an assessed value is a complicated process. A tax assessor (a licensed professional) gives an opinion of value in accordance with the basis of real property value recognized by state law.

In New Jersey, each town uses different percentage of the market value as an assessed value. For example, West Windsor used 97% of the market value, whereas, Lawrence township uses only 52%.

A bank will have the property appraised and will (most likely) not issue a loan greater than the appraised value of the property, which may or may not be the same as assessed value or the sale price. Thanks.
0 votes Thank Flag Link Sat Jul 19, 2014
The purpose of assessed values is to spread the tax liabilty accross all property owners in a town as fairly as possible. Some towns are assessed at 100% value while others are 60% or less. They are not a reflection of true value and are not used by appraisers or Realtors in determining an opinion of value. From your perspective as a buyer and future owner, a low assesment in relation to your neigbors means lower taxes, so that may be a good thing for you.

Feel free to contact me for more information. I don't make money for referrals, just my inspections.

Rafi Footerman
Mid Jersey Inspections
NJ Home Inspector Lic. #076900
0 votes Thank Flag Link Wed Jun 24, 2009
A buyers lender will send out their own appraiser to value the property and NO they will not lend more than the property is worth, especially in a flat or declining market unless you pull the difference of cash out of your pocket to pay for it.

I noticed that you were really talking about assessed value and not appraised value which by now I'm sure you know can be a huge difference.

Assessed values are calculated using tax rates set by the municipalities and don't reflect actual value, just a range based on the averages using a rate. This topic can make your head spin trying to figure it out but is an important one if you ever wish to have your taxes reassessed to lower them.
0 votes Thank Flag Link Mon Jun 22, 2009
typically when you are doing a loan you can ask for cash out. Cash outs allow you to get a check rightr after closing. These are typically done if you need some pocket cash or if you need to clear up som debt. Also you want to factor in clsoing costs(you can add the closing costs in your loan so this way you dont have to bring a single cent to closing) I have done at least ten cashout loans in the past six months. out of those nine or ten, three of them got a check back ranging from fiftey to four-hundred dollars back at closing.

If you want a little extra for what ever reason you can ask for cash out and that would be best.
0 votes Thank Flag Link Fri Jun 19, 2009

The appraiser with whom your going to be financing the home with will send out a appraiser. Once they determine a value that is what the bank is willing to lend you for the home. Hopefully that answers your question.
Thanks Nick Christopher
0 votes Thank Flag Link Sat Jun 6, 2009
Hi J C,
I see that you clarified your question. The answer is ABSOLUTELY! Often, the assessed value is much less than the market value of the home. After you place an offer and it's accepted, the bank whom you're getting your loan through will send out an appraiser. That appraiser will review neighborhood comparables and other factors and come up with their opinion of value (the appraisal). That's what they'll lend you -and it is often much more than the township's assessed value.

0 votes Thank Flag Link Tue Jun 2, 2009
Yes they will lend more than the assessed value. The will compare similiar homes that have sold and come up with a figure. I recently sold a home originally listed a $135,000, when the price was reduced to $115,000 my client offered $95,000. The home appraised for $104,000, but assessed for far less.

Good luck!

Laura Giannotta
0 votes Thank Flag Link Tue Jun 2, 2009
Hi JC,
I have a feeling that you are looking at the field in the listing for the "assessed value". That is the township's assessment of the value of the home at a certain point in time. In NJ that assessment date can be as far back as 10 years so it often is not accurate.

Now to answer your question in general: NO, a bank will not usually lend more than the appraised value of the home. It's just not good business to do so. You could pay the difference of the contract price and appraised price - but that's just not smart (unless the difference is miniscule, I'd never recommend that a client of mine do that -especially in this market).

That said, there is something called an FHA 203-k rehab loan which will give you additional money to fix up a property, but I believe the limit is 35k over the contract price. The property has to be able to appraise at total of the contract price + cost of repairs when all work is done. So, in a simplified example: If you're offering 50k on the a home and it needs 30k in repairs, as long as the value of the home will be equal to or greater than 80k when all repairs are done, it will be eligible for the FHA 203k. Of course there are other limits and guidelines to this program. If you need information on good mortgage loan officers, I can provide you with a few referrals. Give me a call or shoot me an email.

Kim Thomas
Realty Executives Brown & Pope
0 votes Thank Flag Link Tue Jun 2, 2009
Oh, I'm sorry. I meant to say assessed. Thank You. Any help would be greatly appreciated.
0 votes Thank Flag Link Tue Jun 2, 2009
Are you talking about an appraisal or the assessed value?

Laura Giannotta
Keller Williams Atlantic Shore
0 votes Thank Flag Link Tue Jun 2, 2009
A short answer to your question is yes. Most lenders will not issue a loan for such a property.

An appraiser is a licensed professional who can give an informed opinion about a property at a particular time. An Appraiser can use three different acceptable methods of determining the value of a house but the most often used method is “comparables”, sale price of similar properties in the immediate area for the past 6 months or so. Generally, appraisals are an accurate reflection of the worth of a property!

The market value of a property is, ultimately, determined by a buyer. If a buyer is willing to pay twice as much as a house is generally considered to be worth, then that is her/his poragrative. However, a lender will not to issue a loan for the amount greater than the appraised value.
Flag Sat Jul 19, 2014
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