Home Buying in New York>Question Details

Robert, Home Buyer in New York, NY

Unhappy with bank's appraisal of Manhattan co-op I'm in the process buying.

Asked by Robert, New York, NY Fri Nov 30, 2007

Recently sold comps and buyer comps, location, very high owner occupancy rate, and square footage shows the value is approximately $40-60k higher. Do bank's purposely appraise value equal to the buyer's cost even though the appraisal value is much higher?

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I have seen a lot of things, and I will point you to the real estate agents' adage that a sale ain't closed till it's closed.

If a seller thinks they're leaving enough money on the table, they can theoretically pull the contract, refund your deposit, re-sell the apartment, and let you chase them around the courthouse for years to collect your damages.

What park are you going to live in while you're suing them for specific performance?

Certainly not all sellers are this unethical, but it is a risk.

And as far as property taxes, just because you're only paying a share of them through your payment of maintenance to the corporation doesn't mean you want them to go up.

Alison Rogers
author, "Diary of a Real Estate Rookie"
Insider Real Estate Tips with a Twist of Humor: http://tinyurl.com/2ag28z
Web Reference: http://tinyurl.com/2ag28z
1 vote Thank Flag Link Fri Nov 30, 2007
When I do an appraisal for the bank, or anyone else, I call it as I see it. If the closed sales show a higher value than the selling price, the property gets appraised higher. If the sales show a value lower than the contract price, the property gets appraised lower. So, no, I do not purposely appraise the property equal to anything. Most of the bank appraisers I know operate the same way.
Web Reference: http://www.marcpaolella.com
0 votes Thank Flag Link Mon Jan 21, 2008
The direct answer is yes. They do this on purpose.
I am a builder and have asked the same question of mortgage lenders, who told me that appraisals rarely come in much higher than sales price. I had one appraiser tell me several times "What a great price" the buyer was getting, and them came in at sales price.
The appraisal is obviously for for the bank's purposes. If the bank ultimately forecloses, and cannot realize the higher appraisal, the appraiser has needlessly taken on risk. So they generally will not come in much above sales price.
I wouldn't worry about it.
0 votes Thank Flag Link Mon Dec 10, 2007
I wouldn't worry about it unless it affects your financing. In that case, you could request a re-appraisal based on the evidence you have gathered. The bank is not obligated to do it, but they may. It never hurts at ask. If your financing is compromised (and you can withdraw from the contract), try to renegotiate with the seller in order to overcome the obstacle. Good luck. Contact me at jf.sellsius@gmail if you need further help. I am a real estate attorney.
0 votes Thank Flag Link Mon Dec 10, 2007
Appraisals are subjective. It is one persons opinion at a given time.Three appraisers can come and give a different opinion. It is only for the bank and the appraised value is not the same as the market value. Your property taxes in a coop have nothing to do with a bank appraisal for a coop unit loan. The city asseses your building and the taxes are divided by shareholders in the corporation. If you are the buyer, you are paying for the appraisal you are the client of the bank not the seller. It is only of interest to the seller if it appraises lower than the sale price and you can't get financing. Then you have to renegotiate. Often appraisers don't do their homework and if there is not an agent to supply them with comps they can get it wrong. As long as the bank is giving you the amount you applied for that is all that matters
0 votes Thank Flag Link Sat Dec 8, 2007
Mitchell Hall, Real Estate Pro in New York, NY
The property only needs to appraise for the bank's risk...
0 votes Thank Flag Link Fri Nov 30, 2007
The contract is already fully executed. The seller can't pull the co-op. Second it's a co-op which means the co-op members share in the payment of taxes through monthly maintenenance costs.
0 votes Thank Flag Link Fri Nov 30, 2007
I'm a little lost -- if you're appraised to the point where your lender will lend, why do you WANT a higher appraisal?

You run the risk that the seller gets wind of it, gets convinced they're leaving money on the table, and pulls the sale before you get a chance to close.

Secondarily, you don't want the city to think that the property is worth more than the bank does, because your property taxes will go up.

Alison Rogers
author, "Diary of a Real Estate Rookie"
Web Reference: http://tinyurl.com/2ag28z
0 votes Thank Flag Link Fri Nov 30, 2007
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