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Appraisals: what a crock of sh¡t...
Posted on 3/17/19 at 7:51 pm
Posted on 3/17/19 at 7:51 pm
Let me preface this by saying I am neither buying, selling, or refinancing a home. And this opinion applies to appraisals when an offer has been made and accepted.
If person A is asking $350k for their house and person B agrees to that price then the bank appraiser comes back and says that the house is only worth $325k, that’s inherently incorrect. Something is worth what someone is willing to pay for it. In this case person B is willing to buy the house for $350k and therefore it’s worth is $350k.
/random sunday evening rant.
If person A is asking $350k for their house and person B agrees to that price then the bank appraiser comes back and says that the house is only worth $325k, that’s inherently incorrect. Something is worth what someone is willing to pay for it. In this case person B is willing to buy the house for $350k and therefore it’s worth is $350k.
/random sunday evening rant.
44
Posted on 3/17/19 at 7:54 pm to poochie
You dont need an appraisal to buy a house.
Accept that and you will understand why the rest of your rant is pointless.
Accept that and you will understand why the rest of your rant is pointless.
This post was edited on 3/17/19 at 7:55 pm
Posted on 3/17/19 at 7:55 pm to poochie
If you were buying it with your own money you would be correct.
Posted on 3/17/19 at 7:55 pm to poochie
If I am loaning the purchaser the money, then I get to decide how much it is worth.
Posted on 3/17/19 at 7:55 pm to poochie
I bet that person is borrowing somebody else’s money to buy it too
Posted on 3/17/19 at 7:56 pm to poochie
When you're borrowing money, the bank gets to decide that. Looks like you'll have to poney up the difference if you want the house.
Posted on 3/17/19 at 7:56 pm to poochie
Just because some incompetent a-hole wants to overpay for something doesn’t mean the bank has to go along for a ride.
Posted on 3/17/19 at 7:56 pm to poochie
I see both sides of it because I understand the bank wanting to be sure that the object being financed is worth the amount being loaned to the buyer. However, I don't think that the appraiser should be told what the contract amount is before doing the appraisal.
Posted on 3/17/19 at 7:58 pm to poochie
quote:
If person A is asking $350k for their house and person B agrees to that price then the bank appraiser comes back and says that the house is only worth $325k, that’s inherently incorrect. Something is worth what someone is willing to pay for it.
Correct, Skippy, and the bank is willing to pay $325k for it.
Posted on 3/17/19 at 7:59 pm to poochie
It’s called collateral. This is sort of important to a secured lender.
Posted on 3/17/19 at 7:59 pm to poochie
You are correct if you have the cash. If you are borrowing the money, it doesn't matter what you're willing to pay for it.
Posted on 3/17/19 at 7:59 pm to poochie
quote:
In this case person B is willing to buy the house for $350k and therefore it’s worth is $350k.
This is in place to protect the buyers; it's a checks-and-balances to prevent the banks from lending more money than necessary to a public that is not experts in home values.
Lending way more than a home is worth was part of the housing crash in 08-09.
Posted on 3/17/19 at 7:59 pm to poochie
Let’s say you are correct. Then I could get a friend to buy my 250k house for as much as they could be approved for and then let them default/ file for bankruptcy and then split the profits later on.
Also, in my experience the appraisals are very generous
Also, in my experience the appraisals are very generous
This post was edited on 3/17/19 at 8:17 pm
Posted on 3/17/19 at 8:00 pm to poochie
Never will get a loan without an appraisal.
But appraisals are mostly related to comps, or comparable homes recently sold in the area.
However, there is some subjectivity involved.
How much, really, is that granite countertop in the 3rd bathroom really add to the value?
But appraisals are mostly related to comps, or comparable homes recently sold in the area.
However, there is some subjectivity involved.
How much, really, is that granite countertop in the 3rd bathroom really add to the value?
Posted on 3/17/19 at 8:00 pm to jrodLSUke
Lending to people that couldn’t afford the houses was the bigger problem.
Posted on 3/17/19 at 8:01 pm to poochie
quote:
If person A is asking $350k for their house and person B agrees to that price then the bank appraiser comes back and says that the house is only worth $325k, that’s inherently incorrect.
The bank is saying that's the assessed value that they'll loan out for the house. If you want to pay more, then it'll have to come out of your own pocket
Posted on 3/17/19 at 8:02 pm to poochie
Uh well your example is missing some information. Lender appraisals are done to a (lender required) defintion of market value, defined as the most probable price. This must be supported by market data (that also has some defined rules around what you can use). What a buyer would pay for a house is just one data point. You can't hang your hat on one data point.
Before the 80s crash appraisals were done to the highest probable price.
Before the 80s crash appraisals were done to the highest probable price.
This post was edited on 3/17/19 at 8:12 pm
Posted on 3/17/19 at 8:04 pm to poochie
quote:
If person A is asking $350k for their house and person B agrees to that price then the bank appraiser comes back and says that the house is only worth $325k, that’s inherently incorrect.
That's not how it works
Posted on 3/17/19 at 8:05 pm to poochie
You can go pay 80k for a Corolla if you want to and technically that's what it's worth to you.
You can't get an 80k loan for it because when you default on it the bank can only get 10k at auction
You can't get an 80k loan for it because when you default on it the bank can only get 10k at auction
Posted on 3/17/19 at 8:15 pm to poochie
The second you need a loan, the second you lose control. The bank isn’t going to lend what they cannot sell it for. It may be worth that to you, but seeing how you need a loan....you prob don’t make very good decisions. The bank is smarter than you.
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