Home Selling in Conroe>Question Details

Susan, Both Buyer and Seller in Conroe, TX

can you sell a home for more than it its appraised for?

Asked by Susan, Conroe, TX Thu Aug 14, 2008

Our home was appraised for less than we paid in 2004 new, less than what the appraisal district appraised it for! Our home is in excellent condition. The appraiser told us we could not sell it because the buyer would have to pay the difference. Can we trust this random appraisal?

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Susan,
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.
Margaret
1 vote Thank Flag Link Fri Aug 15, 2008
Of course you can sell a house for more than what an appraiser says it's worth.
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.
4 votes Thank Flag Link Thu Aug 14, 2008
The simple answer is yes....the more difficult answer might be no.
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.
Web Reference: http://www.teamlynn.com
4 votes Thank Flag Link Thu Aug 14, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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Were you doing the appraisal for a home equity loan, home improvement, or refi? Sometimes THAT will make the difference in the ACTUAL amount that it has appraised for. In my experiences here in North Texas, the bank/lender NEVER gives a true market value when appraising a property to do the type of loans I just mentioned.
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.
2 votes Thank Flag Link Thu Aug 14, 2008
It is not uncommon (especially in today's market) to find homes appraising for less. Appraisers must use recent sales comps (that meet FNMA guidelines) to derive value for your property. If sales prices are down then it stands to reason that your home value will also fall. It stinks, but it is what it is! However, yes you can sell your home for more than the appraised value IF you can find a buyer that is willing to do so, and has cash downpayment. A bank will not loan more money than what the home appraises for, so you definitely need a buyer that has cash down. However, here is the catch..a good real estate agent is going to make sure that they tell their client that your home is "overpriced" in comparison with others in the area. They will provide them with comps that are similar and then it is up to the buyer if they wish to proceed. It may be that the buyer falls in love with your home and doesn't care that it is "overpriced" in comparison with others. They may be willing to go ahead with the deal and put a cash down payment on it anyway. Hope this helps a little bit!
2 votes Thank Flag Link Thu Aug 14, 2008
Well Susan...

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!
Web Reference: http://www.eXposedHomes.com
1 vote Thank Flag Link Thu Aug 14, 2008
Once you have an appraisal done on your home that detemines the value that lenders will lend on. You can sell your home for whatever a buyer is willing to pay ...however if they are financing the property they will have to bring the differnce in appraised value vs. purchase price in cash.

I hope this helps.
1 vote Thank Flag Link Thu Aug 14, 2008
Im selling my house for 110,000 & it apprased for 101,000 . . . Can i still sell it for my asking price ?
0 votes Thank Flag Link Sun Mar 10, 2013
DATED POST...

Absolutely.....provided it's to a cash buyer that isn't interested in what the property appraises for.
0 votes Thank Flag Link Mon Feb 25, 2013
If the appraiser is a licensed appraiser, this is the price that the lender will be willing to write the mortgage for. The lender is always protecting their interests in that they don't want to hold a property for which they can not get the return on their investment.It is true, that the lender would then need either the buyer to make up the difference or the buyer and seller negotiate the difference.
0 votes Thank Flag Link Mon Feb 25, 2013
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