to determine the Market Value of the house:
If you had, you wouldn't have offered so much, and you wouldn't be in this position.
You assumed that the LISTING PRICE was an accurate indication of the worth of the house;
your second mistake.
The next you find a house, enlist the help of a Realtor to protect your interest.
That is what we are there for.
NMLS # 6395
Financing Kentucky One Home at a Time
The real issue is that the bank does not want to loan money on a home if they can not sell it and get their money back.
If you put more money down, the bank will let you buy a home that is overprices because they are taken less risk and you are taking more.
The bank is protecting themselves and, in turn is protecting. You should feel the same way about this. If the home is prices too high, you do not want to run in and buy an over-prices home, do you?
Your realtor should be competent enough to look at closed sales and listings to see if you are about to pay too much. If not, find a different realtor or hire an appraiser. This is much better than losing 10,000 or $50,000 just like that.
You also need an agent who knows houses inside out: that is, how they are built, something about electrical, plumbing and heating systems, roof longevity, etc. As you look at a house, you and your agent should be discussing the condition and what might be found during an inspection.
Going into an offer blind is bound to cost you money (but, hopefully, not as much as the couple in The Money Pit). Buyer's Agents owe you some expertise. Shop wisely for an agent and you won't find yourself spending for inspections and appraisals that can be avoided.
You may consider this the cost of doing business and money well spent, if you get the house. Otherwise, it's hard to say. As a buyer's agent, I provide my own "pre-inspection" looking out for things which the inspector or appraiser will find. While I'm not a licensed appraiser, I have a background in construction and HVAC and have attended hundreds of inspections over the years. I find that this can be a huge help for my buyers when we see issues upfront and can decide how we want to address them in the purchase process.
The issue of the appraiser is somewhat different. An appraisal is an "opinion of value" and two competent appraisers may come to different conclusions. If the value is way off, your broker should have caught this and advised you when they completed a comparative market analysis. A CMA is not as detailed as an appraisal, but would generally indicate if things are close or not. A CMA can also be used to dispute an appraisal if the appraiser did not choose the best comparables in their analysis.
A great Broker/Agent looks out for their buyer's in these areas and "may" have caught some or all, but depending on what the issues are, may not have been able to. I hope this helps.