With an appraisal for fair market valve what would be expected percentage for a negotiated sales price from that determination?

Asked by kpcurrie68, Candia, NH Wed Sep 12, 2012

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Annette Lawrence’s answer
Annette Law…, Agent, Palm Harbor, FL
Fri Sep 28, 2012
Hello KPCurrie,
What a great question! Joe from New Hampshire gave a gigantic clue to which attention must be granted. That clue is, "What is the purpose of the appraisal?"
One purpose is for refinance. It WILL come in high.
One may be for joint ownership buyout. It will come in low.

Another may be for what appears to be the granting of a mortgage. The reality, in this situation, is however quite different than the appearance on the surface. Let me explain.

The appraisal for a home purchase begins with the bank sending the order for the appraisal to an appraising company. Along with this order for the appraisal are the parameters the bank will impose to define what can be used as comparable. (When you set the RULES for the game you most certainly control the outcome.) So is the case with appraisals.

When the appraisal is returned to the bank, it goes before a review board to verify it conforms to these parameters. This review process is to assure the bank will be able to sell the mortgage to an investment group. They are assessing conformity to the investment group(s) purchase parameters. Does that sound familiar? The appraisal purpose is to resell the mortgage, NOT DETERMINE VALUE.

Now with 40 BILLION a month committed by the FEDS to buy real estate backed assets, we could see a real liberation of mortgage money. $40,000,000,000!

Add that to Blackstone launching a one billion dollar sfh purchase spree and you might see some frenetic buying again.

A prudent seller will need to understand the appraising reality and prepare accordingly. The real estate professionals need to know what the real value is, and they will also know what the appraisal will be when it pops out of the process. This means the real estate professionals will need to establish the true meaning of Fair Market Value, what a willing and able buyer and seller agree upon, rather than what the 'gamed' appraising process reflects.

In an eclectic community, a buyer who if financially tapped out, who can not increase down payment, would not be a good prospect for such a home since the appraised value will always be low and the seller should REQUIRE the buyer to bring a pile of cash to the closing table.

Home sellers need to start saying NO to this nonsense. Buyers need to get the message the fire sale is over regarding real estate in Florida.

Regarding your question, 'expected percentage from appraised market value" about +15 % in eclectic communities in Florida. All real estate is local, Consult with a professional in the community in which you are buying. If the local market has been rock solid during the past six years, it changes nothing, the appraisal process is the same and the unsuspecting seller takes it on the chin, again.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group, Palm Harbor, FL
1 vote
Scott Godzyk, Agent, Manchester, NH
Sat Sep 29, 2012
Right now homes in Nh are selling near true appraised value, there is a shortage of homes for sale and an ever increasing in buyers looking to buy. There are great deals though that hit the market well below market value and teh key is to act fast before someone else buys it. There really is no set percentage a buyer should discount from asking price because all sellers to do not list at market value, some list way below for a fast sale, some list at market value but may take an offer a little less and some owe too much or think it is worth more and ask much more than asking price. Having a good buyer broker to figure this out and let the buyer know is key.
0 votes
Thomas Beauc…, Agent, Bedford, NH
Fri Sep 28, 2012
Annette, that was explained very well! Thank you!
0 votes
Ron Thomas, Agent, Fresno, CA
Fri Sep 28, 2012
There is a very old saying;
For there to be a good sale,
the Buyer would have been willing to pay more,
and the Seller would have been willing to take less.

If you fall in love, and there were multiple offers; would you be willing to pay 110%?
If the Seller was desperate, and there was only your offer; would they be will to take 90%?
0 votes
Kristen Viner…, Agent, MEREDITH, NH
Fri Sep 28, 2012
Typically, if a buyer is going to finance, contracts around my area are written with a contingency that the property must appraise at or above selling price. If it is a cash sale, you have more flexibility with your asking price., but that buyer could also request an appraisal. Here in the Lakes Region, properties that are listed at fair market value or a bit above are selling around 87% list to sell price ratio.
0 votes
Scott Godzyk, Agent, Manchester, NH
Fri Sep 14, 2012
It really depends on type of home, condition of home and neighbrohood. Right now there is a shortage of homes currently listed with homes selling at a good pace. There is no set percenatage as most homes are selling at market value that are in good condition and the best deals and discounts are homes that need the most work. If you would like some help in buyinh I can certainly do that. Please email sctprop@aol.com
0 votes
Thomas Beauc…, Agent, Bedford, NH
Wed Sep 12, 2012
Although lenders say there isn't a difference between a refi appraisal and a purchase appraisal, i just had a home that appraised for $385k but one month prior the owners did a refi and the same home appraised for $405k, Are you looking to buy or sell?

Call if you need help, Joemccarthy@nhsynergy.com 488-6272
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