What happens when a home is appraised higher than its listing price? My realtor tells me its equity, will this be a problem down the road?

Asked by First Time Homebuying, New Carrollton, MD Tue Sep 14, 2010

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Cynthia White, Agent, Merritt Island, FL
Tue Sep 14, 2010
Wow , You have just heard the magic words every buyer wants to hear. Good Luck
1 vote
The Roskelly…, Agent, Gambrills, MD
Tue Sep 14, 2010
Hi There,

That is great news. Your Realtor is correct. You walk in the door with instant equity. That means you negotiated a price that was lower than what the property is actually "worth". Way to go. Enjoy your new home!
1 vote
Miekeba Jones, Agent, Silver Spring, MD
Tue Jul 2, 2013
Hi First Time Homebuying! Equity is lovely!!
0 votes
rozcc, Home Buyer, New Carrollton, MD
Sat Jun 29, 2013
There was a property assessed at around $170,000 and remained at that price till last year. It attracted a high rate of property tax at that assessment. It sold recently for $4250o, and the condo association had appealed the assessment and brought it down to $60,000. The lower assessment meant the property taxes came down from this year.

The idea of equity in an assessment in the present market is an illusion, as one does not know how the property will be reassessed in the future.
0 votes
Melissa Bark…, Agent, Washington, DC
Wed Feb 16, 2011
Starting out with equity, is a good thing, not a problem, but this does not mean turn around and flip the house.
0 votes
James Anders…, Agent, Gambrills, MD
Wed Feb 16, 2011
That's definitely a good thing, and actually pretty rare when it comes to purchases. The appraisers never seem to really go after, "What is the house worth" but more, can I justify the sale price. I couldn't tell you how many times I have sold a house, and watched the appraisal come in at the sales price, when I know that my buyer was getting a real deal.

On another note, I also don't think appraiser's look at things and value them the same way the market does. For instance, I know that a 4th bedroom on the upper level is worth a heck of alot more than a 3rd bedroom. Most families look for 4 bedroom homes these days, so when I do my analysis, I'll give say $10K for a 3rd bedroom, and $15K for a 4th...I really think there worth that much to the market.
0 votes
brent mendel…, Mortgage Broker Or Lender, Bethesda, MD
Tue Feb 15, 2011
Nothing but a good thing. Rare when I can give such good news. But everyone is right. Here today gone tomorrow possibly. You just never know in this market.
0 votes
Akil Walker, Agent, Upper Marlboro, MD
Tue Feb 15, 2011
1st home buyer,

This is good news for you. keep in my mind value and equity vary in this market, so what is today may not be tomorrow.
0 votes
Monir Mamoun, Agent, Denville, NJ
Thu Sep 23, 2010
This should be a benefit to you in the form of equity. Just keep it private and don't advertise it -- you just need to keep the deal on track and close.
0 votes
Daniel Johns…, , Mitchellville, MD
Thu Sep 23, 2010
It is a good thing, but for the long run don't hold on to that as something set in stone...who knows where the next appraisal may land. Practices are different and that is why it is typical to have listing prices differ from the lender's appraisal. Congrats on clearing the appraisal hurdle...enjoy!
0 votes
Corey Grushin, Agent, East Brunswick, NJ
Wed Sep 15, 2010
First Time Homeuying, your realtor is correct and you should be very happy. This is one of the benfits in this market.

One of my clients took advantage of the market place recently on a short sale., The approved contract price on the short sale is $190,000 and the house appraised for $261,900. Not a bad investment for having to wait 6 months for the approval to finally come down.
0 votes
brent mendel…, Mortgage Broker Or Lender, Bethesda, MD
Wed Sep 15, 2010
No problem at all. Remember that sales price and appraised value are rarely the same. As you just learned. It's a good problem to have just saying that the appraisal was really one persons opinion of value not an actual sales price. Better than the other weay around though. Enjoy the new home.
0 votes
Bill Wootan's…, , Waldorf, MD
Wed Sep 15, 2010
That is true-you have equity! Sorry I am in hospital after heart surgery, so myandwers may be somewhat scrambled! Good luckk on your closing!!

Bill Wootan :|"The Real Estate Man"
W/4 new bypasses and a new pig valve!

But HAVE A COMPLETE TEAM TAKING CARE OF EVERYTHING!
Web Reference:  http://www.billwootan.com
0 votes
Alqamar Malik, Agent, Largo, MD
Tue Sep 14, 2010
Problem???? You just hit the "jack pot"! Sounds like you got yourself a good agent...Congrats
0 votes
Mary Wagner, Agent, Crofton, MD
Tue Sep 14, 2010
Listen to your Realtor, thats a great thing!
0 votes
Fredy, , Palm Springs, CA
Tue Sep 14, 2010
That is a Great issue to have. As equity means money.

Fredy Rodriguez,

760-880-1820
0 votes
Jessica Vela, Agent, Palm Desert, CA
Tue Sep 14, 2010
Equity is a great thing. Good for you. This will not hurt you or be a problem at all it will only help you.
Your property is worth more than what you actually paid for it........Thats never a bad thing.
Good buy.
0 votes
Maureen Fran…, Agent, Birmingham, MI
Tue Sep 14, 2010
Your friends and neighbors become jealous ;-) Congrats on a good purchase!
0 votes
Anna M Brocco, Agent, Williston Park, NY
Tue Sep 14, 2010
Your agent is correct, you have equity--congratulations and all the best.
0 votes
Don Tepper, Agent, Burke, VA
Tue Sep 14, 2010
No problem at all.

That doesn't happen very often. But what it means is that the appraiser believes your home (based on comps) is worth more than you're paying. Say you put a house under contract for $150,000. The appraiser does the appraisal, and feels it's worth $160,000. That's good. If the appraisal is accurate the, yes, your Realtor is correct. That's instant equity. In that example, an additioanl $10,000.

It's no problem down the road. You're still buying the home for the contract price. Your lender will approve your mortgage. And the tax assessment won't be based (at least not directly) on the appraisal. Rather, it'll probably be based on what you paid--the lower amount.

So, no problem at all. It's good news. Congratulations.

Hope that helps.
0 votes
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