Is it normal for a buyer to ask for an appraisal on a home with a questionable listing price?

Asked by Dma1029, Scottsdale, AZ Sat Jan 21, 2012

We have found a home that was sold less than a year ago as an 1800 sq/ft 2 bed 2 bath and is now being listed as 2400sq/ft 3 bed 3 bath. There is a 600 sq/ft guest house on the property that did not have any permits when built in 1991. In 2001 there was a permit for the guest house as "non livable" space. I have to imagine thats why the MLS listing from a year ago did not include it as livable space.

The house is now being listed at 50% higher. It was not a short sale nor a foreclosure and sold for cash 10 months ago.

Our concern is a lender will only lend what the house is appraised at and an appraiser will only appraise the home based on its livable space. Our first offer based on the surrounding comps was rejected without counter. We are happy to pay for an appraisal before making a second offer but we aren't sure if thats normal. It seems as though the seller is not aware of the issue as she paid cash.

Any thoughts?

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10
Ryan Buckley, , Scottsdale, AZ
Sat Feb 9, 2013
Have your buyer agent estimate the market value of the home for you. When you apply for a mortgage the bank is going to require (and charge you for) an appraisal at that point. I wouldn't chance wasting money on an appraisal for a home you may never be able to purchase.



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0 votes
Janet Mohr, Agent, Scottsdale, AZ
Wed Nov 14, 2012
Work with a Buyer's agent to help you with this. There are a lot of outside factors that come into play. An appraiser is just an opinion also and is not what the absolute value is. Ultimately, the value is what you are willing to pay and the seller is willing to sell for. How much value is the property to you? How long will you live there? You need a buyer's agent to help you with this.
0 votes
Doug McVinua, Agent, Gilbert, AZ
Mon Jan 23, 2012
Buyers and Sellers have their own rights to opinions of value, some agree and some don't. I would not do an appraisal expecting to change the sellers opinion.

Might want to attack it from a different perspective or just agree to disagree and find another home.
Web Reference:  http://www.McVinua.com
0 votes
Mack McCoy, Agent, Seattle, WA
Sat Jan 21, 2012
It seems to me that you think the seller is overpricing the home and you think an appraiser will change her mind.

I don't think so.

Putting all of the particulars aside, clearly, the seller has an opinion of the value of the house that you do not share. If you cannot come to terms with the seller, then I advise you to look elsewhere.

All the best,
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Sat Jan 21, 2012
Hi Dma

It is not normal for a buyer to do an Appraisal, but it is done from time to time.
Sometimes, we even do appraisals before we list a home.

The important issue is that the guest house now has a permit.

While it is deemed for non livable space, there is still value.

Keep in mind there is no guarantee that aver spending a few hundred you turn in a revised offer
With the appraisal that the seller will take it.

The fundamental question comes up is that the guest house definitely has value.
Good luck.
Ruth
0 votes
Don Tepper, Agent, Burke, VA
Sat Jan 21, 2012
No. It's not normal. It'd pretty much be a waste of money.

Here's what happened: An investor bought the house (low price, call cash) a year ago. The investor put some money into the house and also probably tried to convert the guest house into what would be defined as liveable space. Now the investor is trying to sell it at the greater square footage.

Your concern is valid: A lender will only lend what the house is appraised at. The appraiser will appraise the house based on comps.

You say your first offer based on the surrounding comps was rejected. If you're comfortable with the comps you and your agent used, then stick with that number. Don't go higher. And don't waste your money on an appraisal. Look: Even if YOUR appraisal came back higher, that doesn't mean the mandatory appraisal required by your lender would come back at that figure.

There are other problems, too. Even if the investor legitimately increased the value of the property by 50%, an appraiser (and the lender) will look at that rapid rise in value. That'll raise a lot of red flags. The investor can attempt to address that concern by providing proof of the upgrades, but that isn't a sure thing.

Discuss these issues--particularly the comps--with your agent. Then make a decision. But I wouldn't advise that you spend good money getting an appraisal when it won't matter at all.

Hope that helps.
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Sat Jan 21, 2012
"You can indicate that if the home appraises more than your offer you would be glad to pay the appraisal price"



No, no, no......... I would never suggest that a buyer agree to that.....as was stated below , appraisals can vary and are not an exact science.........with a clause like that you could open up a door you do NOT want to go through..........you should just want to make sure the house appraises out, at or above your purchase price............if below, then you should have the right to walk.
0 votes
Robert D Hug…, Agent, Devon, PA
Sat Jan 21, 2012
Great answers below Dma1029. Don't waste any of your money unless the seller agrees to sell the home at the price of an independent appraisal. If you can't come to a meeting of the minds; it won't matter. Best to send your comparables along with a letter explaining your offer. You can indicate that if the home appraises more than your offer you would be glad to pay the appraisal price. Same goes for inspections, make them contingent upon seller acceptance. That way if you can't come to an agreement; you are not out any money.

Appraisals are nothing more than an opinion of value Dma1029. 3 appraisers most likely will come up with 3 different values.

Good Luck,

Rob
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Sat Jan 21, 2012
Either you and the seller can come to an agreemnt on the purchase price, or you can't.

Paying for an appraisal in advance of having that agreement (even if the seller will allow it) is a waste of money, imo, since you have no idea if you will even have a meeting of the minds.
Just because you may be able to show the seller a lower appraisal number than the list price, doesn't mean the seller will "see the light" and agree with you.

Find out if you can negotiate and wind up with an agreement first.

If you do reach that point..............
Make sure your contract has a clause stating the house MUST appraise at the sale price, or you may cancel the deal.
That way you're covered, and haven't spent any money until necessary.

Good luck!
0 votes
Christopher…, Agent, Methuen, MA
Sat Jan 21, 2012
I personally would not pay for an appraisal at this point. Have your buyer agent estimate the market value of the home for you. When you apply for a mortgage the bank is going to require (and charge you for) an appraisal at that point. I wouldn't chance wasting money on an appraisal for a home you may never be able to purchase.

You cannot purchase the house unless the seller agrees in writing with you to do so. That means that the seller has to agree on the sale price. Why pay for an appraisal or a home inspection if you don't have the home under agreement? Another party can just come in and take the house from you and you will lose your investment in the appraisal.

It sounds like the seller may have overpriced the home?

I know some great agents in Scottsdale if you would like a referral for an excellent buyer's agent to represent you. Good luck!
Web Reference:  http://teamlefebvre.net
0 votes
Why do so-called Real Estate professionals take listings at prices far above sold comps and appraisals? Seems to me they talk about comps but it all goes down the drain when they want a listing.
Flag Thu Jun 7, 2012
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