I'm interested in buying a home but the asking price is $20k over appraisal. Is this normal?

Asked by Rebecca, Dallas, TX Wed Aug 20, 2008

What price should I try to negotiate at?

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9
T.E. & Naima…, Agent, Dallas, TX
Wed Aug 20, 2008
I think you are talking about the tax assessed value not the appraisal... is that correct?

What does your Realtor tell you? A market analysis of the immediate neighborhood should give a good indication of the closest value of the home is.

Naima
214-289-8555
naima@sumner-realty.com
2 votes
T.E. & Naima…, Agent, Dallas, TX
Thu Aug 21, 2008
The appraised value from the Appraisal District is done by a method known as "mass appraisal" where the property is given a value based on the non-distressed sales in the nearby area. Mass appraisals are done from the outside -- no inside evaluation of condition or amenities.
Since foreclosure sales are ignored for mass appraisals, the market value of a house might be a little high if there are distressed sales in the area.
You have used the right word "normal" to characterize prices. They are a distribution about some median price, some higher, some lower. The time of year affects the median as well as condition and features of a property. A common myth is that market value is a single number. A sales price will fall within a range of numbers, and 'the' value on an appraisal should be considered as having a "plus or minue" after it.
Negotiating is a whole other art from estimating value. Knowing what your maximum price to pay is a good place to start. Discuss with a qualified Realtor what the house should sell for next. If your price is below the should-sell price, ask if negotiation can result in your price or not.
There is no right or wrong. The seller might take your offer. If you can understand the seller's position, such as an heir who has no ties to the property and no mortgage to pay, or, say, a hard-pressed couple who just bought the house last year for what they're asking, you can guess what the answer will be about taking $10-20k off.
Your Realtor probably has the tools to advise you and negotiate for you.
1 vote
, ,
Wed Aug 20, 2008
I suspect that Naima is correct. Are you getting the 'appraised value' from the Central Appraisal District? Those will be below market value in a healthy neighborhood.
In the old days, some hot markets would sell above appraised value.... not anymore. At least, not around here that I know of off hand.
Do you have a realtor?
1 vote
Bruce Lynn, Agent, Coppell, TX
Wed Aug 20, 2008
It is possible. Are you referring to the tax appraisal or the bank appraisal. The tax appraisal that is public information to me really has no bearing on the value of the house. I rarely look at the appraisal number for any reference....only for the size....but this is often wrong as well. These numbers can jump around all over the place above-below-and close to market value. The bank appraisal is the number you want to rely on.....these should be much closer to market value in my opinion. What does your competitive market analysis tell you? Is the house under valued, over valued or spot on? Your realtor can help you to decide how much to offer, but in the end it is your choice and lots of factors can come into play. How bad do you like that house? How long has it been on the market? Was it 1 of 100 that you liked or have you seen 100 and liked all of them? If you like every house you see then bid low as if you don't get it another will come along. If it is next door to your best friend--then maybe you want to pay more to be next door?
Web Reference:  http://www.teamlynn.com
0 votes
Josh Thomas, , Austin, TX
Wed Aug 20, 2008
As my colleagues have stated, the market price and the appraised value are not quite the same thing. Homes may be appraised as little as once or twice a year, but the market can change daily. Your best bet is to do a Comparative Market Analysis or have your Realtor do one for you.

To answer your question directly, offer the price that YOU are comfortable with. In the end, this is all that really matters. Make an offer and see what happens. If it is a reasonable offer, the seller may accept, or at least counter. Good Luck. Any of us here on this thread can assist you if you need further help.
Web Reference:  http://www.dealoftheweek.org
0 votes
Mattye Smith, Agent, Addison, TX
Wed Aug 20, 2008
Consult with your Realtor, for a market analysis of like homes...this should give you a baseline for your offer.

Best regards,

Mattye P. Smith
Realtor

Colonial Real Estate
0 votes
Chris Harden, Agent, McKinney, TX
Wed Aug 20, 2008
You need to ask a realtor to compare the home to recent sales in the area while keeping mind any updates,upgrades or changes to the area. Appraisal districts are known to be off on their values. Plus keep in mind the comparables they looked at were from last year and not the last 6 months.
0 votes
Maria Morton, Agent, Kansas City, MO
Wed Aug 20, 2008
Your realtor can help you determine the fair market value of that home.
They can also give you their professional evaluation of the home regarding condition, price and comparable properties in the area.
If you prefer to try to figure this out on your own, start by going to the county Recorder's Office and asking the clerk to help you find recently sold properties in that subdivision and the surrounding subdivisions. Then consider the condition the sold properties were in at the time the contract was submitted and the final selling price after inspections & repairs. Compare those closest in floorplan, condition, and location to the subject property. That will give you the price range.
0 votes
Scott Godzyk, Agent, Manchester, NH
Wed Aug 20, 2008
It depends where the appraisal came from, the appraisal and assessed value are often not the same, assessed values are rarely what market value is. If you are buying and had an appraisal, the bank wont loan on more than the appraised value, you will have to ask for a price reduction. If you havent made an offer i guess it would really depend on where the appraisal came from, what purpose it was done for and is it current. If it is then you should offer at what it is appraised at and include the apopraisal as backup as to why you offered so low. good luck
Web Reference:  http://www.ScottSellsNH.com
0 votes
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