No, it is not common practice for a buyer of a coop apartment, or any other type of real property, to have an appraisal done before making an offer. Since most people do not have sufficient knowledge of market prices unless they have been an unusually active buyer or seller, the best action they can take is to find a buyer's agent to work with. A quality agent will be able to correctly price properties to the current market and negotiate on your behalf to get the best possible terms.

Sun Jun 8 2008, 09:33

Your question makes perfect sense but it is not common practice for a potential buyer to request to do an appraisal before making an offer. They might do an home/engineer inspection, but even that is uncommon prior to offer.

Thu Jun 5 2008, 23:11

Hi Y,

If a buyer is serious about making a purchase, they view an appraisal as a crucial part of their decision making. At $300 - $400 a report, this is something buyers takes very seriously. The person who orders the appraisal owns the appraisal, which is why more buyers are requesting them rather than relying on the possible goodwill of someone else making their copy available (or not).

Mitchell makes an excellent point about using ACRIS, however, there will be a few times where the entire building's valuation will be shown rather than each individual unit because co-ops use master leases and shares (private property) rather than condos (which deed each individual unit). Parkway Village co-ops are a perfect example of this. I was working on a CMA this morning and the address of the 2 bedroom unit my client is purchasing returned an assessed valuation of $33 Million (smile).

Regards, C.

Tue Apr 15 2008, 18:39

There is no benifit to a seller of a co-op to allow a potential buyer to do an appraisal before they make an offer. Selling a coop in NYC is much more complicated than selling a house in the suburbs. In most places all a buyer needs is a mortgage to buy a house. To purchase a coop in NYC qualifying for a mortgage does not qualify a buyer to pass a coop board.

In NY state a verbal or written offer, counters and accepted offers are not legally binding. Until there is a signed contract neither seller or buyer has any legal obligation toward the other. Without the buyer making an offer that includes all of their finances how would you (seller) know if they are even qualified to pass the coop board.

Not all buyers need mortgages or mortgage contingencies. In Manhattan almost 50% of all transactions are all cash and many sellers in Manhattan including most new condo developments do not allow financing contingencies. Many buyers in Manhattan make offers with no financial contingencies.

As a shareholder/seller in a co-op your building's board of directors has a fiduciary responsibility to it's shareholders. You are entitled to the recent sales comps in your building directly from your coop board or managing agent. A potential buyer can also get this public information from ACRIS on the NYC.gov website.

Once they make an offer and provide you with their income, assets, liabilities and terms there is still time for them to have an appraisal before they sign the contract. In a coop purchase most of the terms of the offer are dictated by the co-op board.

The co-op dictates how much the buyer has to put down. The coop can also require what type of mortgage the buyer must have. Many NY coops do not allow risky mortgage products.

Make sure they are qualified to buy in your building first.

Tue Apr 15 2008, 13:50

Gail is absolutely right. The bottom line is that a Buyers mortgage Company will require an approved appraiser to apprise the home before issuing a mortgage. They are usually the last line of defense before the transaction can be completed. I ALWAYS present to my sellers BEFORE listing their property what a realistic price they can expect to get for their home. Why not get an appraisal up front and save everyone the headache of wasted time, energy, money? Sellers usually don't want to do this because they are afraid of the truth and are hoping they can somehow push the envelope. Every Seller thinks their house is the Best and therefore should get more money for it. If an appraiser says your house is worth 10% less than you think. Then that's all you can expect a Buyer to pay for it because he is funding it with mortgage money.

Sun Apr 13 2008, 05:55

The bank doing the financing will require an appraisal and only use someone from their approved list.

The appraiser uses recently (3 or 4 months) sold comps. A smart seller uses an equally smart Realtor who will provide those exact same comps in pricing the property for sale. A smart seller will stay within the range established by the comps. If the house does not appraise, the buyer is not obligated to purchase (he will not receive a commitment from the bank).

The seller does not have to allow this and the buyer can take his appraiser to another property.

Sat Apr 12 2008, 21:28

I've had buyers ask for an appraisal before putting in an offer. They pay for it of course. There will be one at some point anyway.

Sat Apr 12 2008, 19:39

i'll never buy any property witout appraisal.

Sat Apr 12 2008, 19:30

Everything in real estate is a negotiation. I've had Buyers request to have an appraisal done prior to submitting an offer because I couldn't help the Buyers justify the asking price of a Seller's listing. There were no comparables to support such a price and my buyers were very interested in the home. The seller is never 'Locked in'. And I don't believe this puts a seller at a disadvantage. Why not know up front what a mortgage lenders appraiser thinks? It could save everyone a lot of time and energy. One thing you have to realize about appraisals is that they are educated guesses of property value. Three different appraises will give you three differnt values of your home. I'm finding that in the Buyers market (South Jersey) Sellers aren't even getting appraisal value of home in contract prices. Ultimately a house is only worth what a willing buyer is offering to pay and a seller is willing to sell it at.

Sat Apr 12 2008, 18:33

The effectiveness of an appraisal when the parties disagree is on price is only useful if both parties feel the appraiser is unbiased. A big part of our appraisal practice pertains to divorce assignments where both firms hire us - otherwise it's a battle. An appraiser can be the most honest neutral person in the world, but if both parties are not the client, they would be perceived as "tainted" by one side not happy with the outcome. We rarely are asked to perform such an appraisal for what you described since the seller would not be willing to adjust a price lower if you as a buyer already agreed to it.

Sat Apr 12 2008, 18:23