Thread: Appraisal Question

Originally Posted by Cyclone1985

Hi, I am a first time buyer, and I could use a little help on this process. I am looking at a home that I like that is listed for 249,000. It has been on the market for 29 days, and this is a fair price for the home in the area. However, I was provided with an appraisal and assessment sheet, and the appraised value is 225,200. There is also an assessment value of 25,898. Is this home overpriced based on the appraisal, or do I need to include that assessment value in my calculation (which brings the value over 251,000)? Thank you, and if you need more info, let me know.

The tax assessor has their own formula to derive value, not to be confused with an appraisal. Many times it is the last sales price, which would not be reflective on today's market. You say the house is listed at $249K and it appraised at $225K. Who was the report prepared for? Was it done for your lender and your currently in escrow? You say it's a "fair" price, how do you know? Have you seen a Comparative Market Analysis (CMA) of ALL the active listings, pending sales, and RECENTLY closed sales in the neighborhood? If your lender had it appraised and it came in at $225K, you may want to reduce your asking price.

Hello Cyclone1985! A very good question indeed and I thought I would briefly share my "two cents."

Just because you see a property on MLS listed for a certain amount, we know that this does not mean that is what the home is worth. I would strongly encourage you to hire a top real estate agent to do a market analysis on the property. This is essentially what an appraiser does, but it would be good to get a second opinion and have a realtor do the CMA.

As a buyer, remember that the seller pays the real estate agent's commission. Even when I was not a real estate agent here in Minnesota, I worked with one. He or she can provide alot of value in guiding you through the transaction as well as making sure you are getting a fair price on the home.

The assessment has no bearing whatsoever on market value. Depending upon how a buyer writes up the purchase agreement, seller or buyer can pay the assessment at closing or over a set time period.

I hope this helps!

Originally Posted by Cyclone1985

Hi, I am a first time buyer, and I could use a little help on this process. I am looking at a home that I like that is listed for 249,000. It has been on the market for 29 days, and this is a fair price for the home in the area. However, I was provided with an appraisal and assessment sheet, and the appraised value is 225,200. There is also an assessment value of 25,898. Is this home overpriced based on the appraisal, or do I need to include that assessment value in my calculation (which brings the value over 251,000)? Thank you, and if you need more info, let me know.

Cyclone1985,

You are close in your thinking and the other two posters I feel misinterpretted your question. I believe that you are asking about a private appraisal that came back needing repairs with an assessment of almost $26,000 and so the appraiser came in with an as is value of $225,200. If this is the case I offer the following answer to your question.

The appraiser has reported that the value of the home if the noted repairs or updating is completed would be $251,000. And that he/she estimates the costs for these reparis or updating will cost around $25,898. So, if the property is in good repair you are correct as far as your thinking goes on the value of the home. But, this home has been noted to not be in good shape by the appraiser.

In this market the appraiser is going to be on the high end for the costs of repair and should only be taken as it is a opinion. If you want to determine the actual costs of this work you should get quotes form at least three different contractors for the work that needs to be performed. Then you will have a true expectation of value for the property as far as the shape the home is in.

Good Luck!

If after 3 days it has not been marked pending then what you have is a situation where the agent most likely has plans to keep marketing the property. If this is in conflict with MLS rules or the contract then you need to have your agent speak to the other agent about putting the home in pending status. If this is not in conflict with the contract or with the MLS rules then that is just the nature of the game.