Home Buying in Covington>Question Details

moennichca, Home Buyer in Covington, LA

When buying a property by cash and private sale no realtors but with a professional appraisal. Is it advisable to pay over appraisal value.?

Asked by moennichca, Covington, LA Mon Nov 11, 2013

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5
It all depends upon how much you want to own the property in question and your reason for purchasing it. Keep in mind, an appraisal does not guarantee value. It is basically an opinion of price. Yes, an educated opinion, but an opinion nevertheless. You could have 5 appraisals done and get 5 different values. It's always best to work with a REALTOR who knows the area where the property is located and can check to see what similar properties have been selling for in the recent past.
1 vote Thank Flag Link Mon Nov 11, 2013
Depends on how much the over amount is, how badly do you want the property, did you try to renegotiate the price, etc.; a decision only you can make...
1 vote Thank Flag Link Mon Nov 11, 2013
Appraisals vary depending on the purpose of the appraisal. Many times you'll see a home that says, "Priced below appraisal". That means little to nothing to a seasoned expert...perhaps only that you have a ballpark number. A property is worth what a willing buyer and seller agree to. Fair market value can be projected by looking at recent comparable sales, however - this does not necessarily indicate that a buyer would be available to purchase at the appraised value.

In a market where many homes sit, without offers, for months, sometimes years - while a handful of other, similarly sized homes sell, what happens with an appraisal is, the appraiser pulls from similarly sized and located "comps" that DID sell. If your home, in particular isn't one of the "special" homes with undeniable universal appeal, or something that sets it apart from the competition, then it is more likely that in order to sell, you would have to position your home significantly lower than the "appraisal" value in order to attract a buyer.

The question becomes: What are your plans for the property you are interested in? Is it a long term hold? If something drastic and unexpected happened to you...your career..relocation...etc., would you be able to sustain the property as a rental or find a new buyer for it? What kind of risk does this property present to you if you were to pay the seller's asking price?
0 votes Thank Flag Link Fri Nov 14, 2014
I might want to add one more tiny thing... When going direct to a For Sale By Owner, and skipping the services of a licensed progressional - both parties are attempting, usually, to do the same thing: Keep what the market builds in to fair market value as a commission for themselves...to save the cost of the commission. The seller is trying to do this, and see's that commission in his pocket. The buyer is trying to do that, and see's the commission savings in his pocket. Yet, typically, in the end, neither get the value, as mistakes are inevitably made on both sides that negate the value of the commission savings. It happens, that people save money. But more often than not, the value of the commission goes right out the window and sometimes substantially more than the commission goes with it. Of course a Realtor is going to say this - but it just happens to be true. Be safe out there.
Flag Fri Nov 14, 2014
In s word, no. It's never ADVISABLE to pay over appraisal. That's why you pay for an appraisal. If you are ok with paying more then skip the appraisal altogether.
0 votes Thank Flag Link Mon Nov 11, 2013
why ask a Realtor now? perhaps you should consider hiring one
0 votes Thank Flag Link Mon Nov 11, 2013
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