Appraisal: Does it ever come back HIGHER than you are mortgaging?
cluelessbride
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Appraisal: Does it ever come back HIGHER than you are mortgaging?
If so, what happens? Can you get a better rate or something?
HearzBellz
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
ours was higher then the sale price & higher than the mortgage total. We decided not to do anything about it since we are refinancing in less than 2 years to build an extension, and it could raise the 2nd mortg. amount for the build
cluelessbride
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Interesting! That's great for you!
HearzBellz
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thanks....what were you considering doing with that 'cushion?'
cluelessbride
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I was just hoping we could get a better rate, or maybe do w/out the PMI
btrflygrl
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
ours appraised for $6k more than what we paid/mortgaged for.....but it's a new construction
DjPiLL
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Occasionally.
But there is no real incentive for any appraiser to go higher than the sales price... just to cover their own butts.
But it does happen. More so though... appraisals come in for LESS... depending on the price and property. Thats a PITA.
LisaT
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
it happens, but its generally not significantly higher (at least not validly, because then the house SHOULD have sold for more)
Though some banks will reject an appraisal for more than the purchase price, and other times they'll hope it comes in higher to cover sellers concessions.
Appraising for less is always bad news for the buyer. If you have any specific appraisal questions, I'd be glad to try and answer them.
myasmom
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by LisaT
it happens, but its generally not significantly higher (at least not validly, because then the house SHOULD have sold for more)
Though some banks will reject an appraisal for more than the purchase price, and other times they'll hope it comes in higher to cover sellers concessions.
Appraising for less is always bad news for the buyer. If you have any specific appraisal questions, I'd be glad to try and answer them.
Yeah for the buyers..casue banks will only lend what the house appraises for. So if you love a house you have to hope that the seller reduces the price.
mrsmeri1104
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Ours appraised for $35,000 more than we are paying because we got a deal it is a family transaction!
cluelessbride
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
So there's no such thing as a 'fair' appraisal? Meaning, why does the appraiser have to know what the selling price is? Shouldn't an appraisal be done based on comps, neighborhood, condition of home, land, etc. and not on selling price?
myasmom
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by mrsmeri1104
Ours appraised for $35,000 more than we are paying because we got a deal it is a family transaction!
isnt that illegal
LisaT
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by myasmom
Posted by mrsmeri1104
Ours appraised for $35,000 more than we are paying because we got a deal it is a family transaction!
isnt that illegal
thats not illegal - if the comps support a higher value, its a fair appraisal. Sounds like they're buying for less than market value, so I would expect the appraisal to come in higher.
LisaT
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by cluelessbride
So there's no such thing as a 'fair' appraisal? Meaning, why does the appraiser have to know what the selling price is? Shouldn't an appraisal be done based on comps, neighborhood, condition of home, land, etc. and not on selling price?
Knowing the sales price is helpful to the appraiser - it tells me right from the start what someone is willing to pay for this house. That is a strong indication of the market value of the house.
But sales price isn't the determining factor - are there comparable sales to support that value - how does this house compare to others that have sold in that price range? If there are a number of sales for the same house, for significantly less, then the buyer may be overpaying and the appraisal will come in (should come in) lower.
But there are shady appraisers who will 'make it work' whether its a valid appraisal or not -there is a lot of pressure from loan officers to hit certain numbers. Appraisers often have to 'comp' a job before getting the order. If they can't reach a certain value range, the loan officer doesn't have a deal/loan.
Its more often a problem with refi's than purchases though. You figure if someone is willing to pay X on a house, the house should be worth in and comps should support it (in theory anyway). With refi's, the sky's the limit. No value is ever too high...
eta: An appraisal is 'an opinion of value' supported by comparable sales. Its not an exact science - there's usually some leyway in what $ figure I ultimately set. So if it makes the bank & buyer happy to make it $405K rather than $400K and the comps support $405K, then its easier to know that upfront.
exotica776
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
we are getting a family deal and buying our house for about 85k less than it was appraised for. we plan on using this as a 'gift of equity' thus eliminating our need for a DP. anyone know anymore on this subject?
LisaT
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by exotica776
we are getting a family deal and buying our house for about 85k less than it was appraised for. we plan on using this as a 'gift of equity' thus eliminating our need for a DP. anyone know anymore on this subject?
did you have a specific question? Since your house will appraise for so much more due to the gift of equity, you already have 20% equity in the house and the bank only has to lend you the typical 80% (or less, not sure what your actual numbers are)
LisaT
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by cluelessbride
If so, what happens? Can you get a better rate or something?
to answer your original question, rates do change based on a loan to value ratio. 80% LTV (loan to value) is traditional (you're borrowing 80% of the value of the house and putting down 20%)
Most banks have certain breakpoints, like 60% LTV will get you a better rate than 80%. But that generally comes from a larger downpayment or gift of equity, not the appraisal. It CAN come from the appraisal but a house selling for significantly less than the appraised value will raise eyebrows (family sales, etc excluded).
Which goes back to banks liking the appraised value to match the sales price.
exotica776
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by LisaT
Posted by cluelessbride
If so, what happens? Can you get a better rate or something?
to answer your original question, rates do change based on a loan to value ratio. 80% LTV (loan to value) is traditional (you're borrowing 80% of the value of the house and putting down 20%)
Most banks have certain breakpoints, like 60% LTV will get you a better rate than 80%. But that generally comes from a larger downpayment or gift of equity, not the appraisal. It CAN come from the appraisal but a house selling for significantly less than the appraised value will raise eyebrows (family sales, etc excluded).
Which goes back to banks liking the appraised value to match the sales price.
so will there be a problem with the bank when we are borrowing 85k less than the appraised value? i am new at this gift of equity and really do not know much about it, no specific questions because i dont know enough yet lol.
LisaT
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
Posted by exotica776
so will there be a problem with the bank when we are borrowing 85k less than the appraised value? i am new at this gift of equity and really do not know much about it, no specific questions because i dont know enough yet lol.
No problem at all. You have a valid reason why you would be paying so much less -comparable sales would support a higher value since you're buying the house below market value from family. In this case, you (and the bank) WANT the appraisal to come in higher for the gift of equity.
exotica776
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Re: Appraisal: Does it ever come back HIGHER than you are mortgaging?
thank you so much lisat..... your knowledge is extremely helpful!!!!!
