In 2004 if you purchased a home in Conroe that sold in less than two months, most of the local appraisers would appraise it for the purchase price regardless. I do not know what part of Conroe your home is in so I can not tell you if you really paid fair market at that time or not.
Your neighborhood could be facing a larger than usual foreclosure rate and that will will bring down the values or you may have a high volume of rental properties, this also affects the ascetics and there fore eventually the values of the properties.
And as some of my colleagues have said - private appraisals are not always right on, an appraiser hired by the mortgage company does really try to justify the price.
I have years of experience in the Conroe area and will be happy to give you a
Comparative Market Value (CMA) just as a courtesy. My web is below.
If you had an independent appraisal done for money, it would be unwise to characterize it as random. Tax appraisers use a technique called 'mass appraisal' -- they sit at their desk and never visit the inside of the house to judge its condition. Mass appraisals can be overridden at a tax protest hearing by a paid appraisal.
Unfortunately, the real estate market is suffering from two things that can change a property's appraised value: the market has been declining in some areas, and appraisers are taking very consrvative stances on valuations due to the large number of foreclosed properties. The foreclosed properties are selling below market and dragging down everyone's valuation, except tax appraisals. Tax appraisers basically ignore distressed property sales.
In your neighborhood the prices may or may not have declined, but in general the market has. Some places in Texas the market is up, but on average a 5-10% decline has been noted.
Buyers can always pay whatever they feel is right, but a mortgage lender will look for value approximately at or above the loan so that their investment is secured. If a buyer cannot get a mortgage loan for full price, because the appraised value is lower, the buyer can make up the difference in cash. This can make selling difficult.
A house appraised at $100k selling for $110k and using a 97% loan-to-value mortgage would require the $3k down plus the $10k difference. Many buyers don't have that. You will be pressured into selling at a price that a buyer can get a loan for. A seller-financed second mortgage can make up some of the difference, but if it's large, you may have to cave or lose the buyer.
The appraisal you paid for doesn't count anyway (except for tax protesting) -- the lender will hire an appraiser and it's his call as to the worth of the property.
The appraisal district number is the random number. They've likely never seen the house and likely have never been inside or perhaps even in your neighborhood, so that number is not to be trusted as a market value. It could be way high or way low and even possibly right on. What is more trusting is an independant and neutral bank appraiser. But sometimes these can be off too. If you live in a master planned community where the same builder built 100s of houses, values can be more easily established. If you have a $10,000,000 home in the country that is custom built then the value is more difficult to establish. So......it depends. In any event a buyer could pay more than the appraised value. I would think it is not normal to do this, but there are situations when it might be appropriate. Maybe the house is next door to their parents so they want to pay a premium. Maybe homes never come up for sale in that community and that's where they want to live. Maybe you have a 1000sqft home in a neighborhood that is all 3000sqft, so your home appraises low now and the buyer sees the value. Maybe they have a specific need that your home meets. It does happen, but I would think your home would need to fit some specific need or be somewhat unique to make this happen. The lender will likely lend only on the appraised value. So for example if the contract is for $105,000, but the house appraises at $100,000 and the buyer is using a 90%LTV loan with 10% down, the bank will only lend the $90,000 and the buyer would now have to put down $15,000 intead of the orginial $10,000 or 50% more. That is probably what the appraiser discussed with you. For some buyers it can create a difficulty. If they were originally borrowing $97,000 with $3000 down, now they would need to put down $3000+$5000 or almost 200% more than they had planned. That is where the difficulty comes into play.
As Leesa stated, you can only sell your home for what a buyer is willing to offer, THEN its up to the appraiser finding the comps to back that offer up. Comps in the area should be no less than 12 months old and in a LOT of cases, they HAVE to be no more than 6 months old.
Good Luck. Hope you have a GOOD Realtor also advising you if you are planning to put it on the market.
It seems I've been too busy to catch up to your question and seem to be jumping on the band wagon a little late as I see you've already received some great answers! Bruce seems to be always a guy I can count on for great answers, so I guess I'll just ditto him on this one....
Best of luck!
I hope this helps.