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StringedInstruments
Auburn Fan
Member since Oct 2013
12733 posts

How accurate is a home appraisal for the mortgage company?
My home appraised for $235k, which conveniently was the exact price for the sale.

I’m a bit confused though and a bit dejected as I was expecting the appraisal to be higher. I’m wondering if it’s actually accurate.

The house across the street from me sold in 2018 for $295k. It was flipped and has a lot of upgrades, but it’s 350sqft smaller. It’s also a smaller lot and is on a downsloped hill.

The housing market in my area is booming right now. It’s not uncommon for homes to sell for higher than asking price and for many of them to get multiple offers the first day on the market.

While my house needs to be updated, why in the world could it be $55k less than a smaller house on the same block that sold two years ago when the market wasn’t as active as it is now?

Surely paint and new appliances can’t add that much to the value of a home, right?

Do appraisers just look to see if it’s worth the sales contract price and set it at that?

Edit - not that it really matters because these sites aren’t always accurate, but Zillow says my home estimate is $310k.
This post was edited on 11/20 at 2:47 pm


C
Atlanta Falcons Fan
Houston
Member since Dec 2007
26639 posts

re: How accurate is a home appraisal for the mortgage company?
I guess just on its face why would the appraisal be any different than the sell price? If it was worth more wouldn’t someone else have offered a higher price?


Brightside Bengal
New Orleans Saints Fan
Old Metairie
Member since Sep 2007
3687 posts

re: How accurate is a home appraisal for the mortgage company?
If your house needs to be updated, but the house across the street was already updated prior to its last sale, then it’s not actually a comparable to your house.


StringedInstruments
Auburn Fan
Member since Oct 2013
12733 posts

re: How accurate is a home appraisal for the mortgage company?
quote:

it’s not actually a comparable to your house.


How so? One can estimate how much upgrades might cost.

I could make my house look exquisite for $20k. Does that make it a $295k home? But it’s also larger with more land. Should I expect it to appraise for higher?



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17
GatorReb
USA Fan
Dallas GA
Member since Feb 2009
8395 posts

re: How accurate is a home appraisal for the mortgage company?
quote:

My home appraised for $235k, which conveniently was the exact price for the sale.


Wait im confused here.

Are you selling your home and went under contract for $235 then they got it appraised and it appraised for $235?

If thats the case then didnt it appraise for what you thought it should be?

Maybe im miss understanding you


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90
ItzMe1972
Member since Dec 2013
4703 posts

re: How accurate is a home appraisal for the mortgage company?
That's pretty typical for the appraisal to come in at or slightly above the sale price.

Technically, the appraiser should NOT even know what the contract price is. But it is usually known to the him/her.

I understand how you feel. You paid for the appraisal and wanted to know the current fair market value.

Not clear if you're selling or buying. Please clarify.


TheWalkoff
LSU Fan
Baton Rouge
Member since Jan 2019
213 posts

re: How accurate is a home appraisal for the mortgage company?
(no message)
This post was edited on 11/28 at 1:31 pm


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StringedInstruments
Auburn Fan
Member since Oct 2013
12733 posts

re: How accurate is a home appraisal for the mortgage company?
quote:

Not clear if you're selling or buying. Please clarify.


I bought.

Just seems odd that there could be such a discrepancy between that house and mine and I’m skeptical that the appraisal was dead on the sales price which was even at a discounted number due to not using realtors.


StringedInstruments
Auburn Fan
Member since Oct 2013
12733 posts

re: How accurate is a home appraisal for the mortgage company?
quote:

I guess just on its face why would the appraisal be any different than the sell price? If it was worth more wouldn’t someone else have offered a higher price?



First house I bought in 2009 appraised for $205k. We bought for $179k.

The appraisal isn’t really part of setting the price. It happens after the sales contract has been signed and the mortgage company is determining if it’s a house worth the cost of the loan.

I guess my real question is - do appraisals determine fair market value? If not, what are they determining?


ItzMe1972
Member since Dec 2013
4703 posts

re: How accurate is a home appraisal for the mortgage company?
I bought.

Just seems odd that there could be such a discrepancy between that house and mine and I’m skeptical that the appraisal was dead on the sales price which was even at a discounted number due to not using realtors.
----

The appraiser wants to make sure the mortgage company is protected in case of foreclosure. The appraisal is an opinion of the value on the date of report.

As long as the sales price and market are close, the appraiser will approve with a price that works.

In the old days, they would give actual value. Then they moved on to bumping the price a little over sales price to appear as if they were not just matching. My daughter is closing on a house in a couple of weeks and the appraisal matches the sales price.

Don't feel bad. It's just the way the process works. Congratualtions on your new home!


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40
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jimbeam
USA Fan
University of LSU
Member since Oct 2011
66742 posts
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re: How accurate is a home appraisal for the mortgage company?
It’s because until you make the upgrades on the house, it won’t appraise are what a nicer “comp” will. It I certainly possible to put 20 into a home in the right area and get 50 more for it.

But as it is current, those assumptions won’t be made. Appearance means a lot.
This post was edited on 11/20 at 4:05 pm


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TigerintheNO
LSU Fan
New Orleans
Member since Jan 2004
34799 posts
 Online 

re: How accurate is a home appraisal for the mortgage company?
You bought a house that appraised for what you bought it for, but you think it should have been higher? I wouldn't complain, you will be paying less in property tax, that you believe you should.


BallsEleven
USA Fan
Member since Mar 2019
2581 posts

re: How accurate is a home appraisal for the mortgage company?
quote:

My home appraised for $235k, which conveniently was the exact price for the sale.




Majority of appraisals around here go for asking price. Most of the time if it changes, it goes down.


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10
Dawgfanman
LSU Fan
Member since Jun 2015
11608 posts
 Online 

re: How accurate is a home appraisal for the mortgage company?
quote:

My home appraised for $235k, which conveniently was the exact price for the sale


Agent...


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AUHighPlainsDrifter
Auburn Fan
South Carolina
Member since Sep 2017
430 posts

re: How accurate is a home appraisal for the mortgage company?
quote:

I wouldn't complain, you will be paying less in property tax, that you believe you should.


Property taxes are based on the value assigned by the tax assessor, not the appraiser.


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40
LSUGUMBO
New Orleans Saints Fan
Shreveport, LA
Member since Sep 2005
6540 posts

re: How accurate is a home appraisal for the mortgage company?
quote:

The house across the street from me sold in 2018 for $295k


Appraiser uses comps from the last 6-12 months. It’s also VERY arbitrary. We just closed on a flip that went through three contracts. 1805 sf, 3BR/2.5BA in a highly sought after area.

First contract was for $187, appraisal at $180, contract fell through- financing

2nd contract was for $180, appraisal at $155. We appealed the appraisal using the first appraisal as evidence, but got nothing, so we walked away.

3rd contract was for $187, appraisal came in at $187.

All within 90 days of each other.

Per our realtor, the biggest difference is who is financing the loan. VA loans typically come in way under (2nd loan). We would have closed the 1st deal had the loan not fallen through, but it all worked out for us in the end. I wouldn’t worry about comps and having ‘built in equity’ for a positive appraisal. Anything you need to take a loan out for is going to need a new appraisal, and you just hope your $495 is well spent.


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TigerDeBaiter
LSU Fan
Member since Dec 2010
8911 posts
 Online 

re: How accurate is a home appraisal for the mortgage company?
Appraisers are a joke. All they do is work backwards, starting with the sales price.


HighlyFavoredTiger
LSU Fan
TexLaArk
Member since Jun 2018
129 posts

re: How accurate is a home appraisal for the mortgage company?
I’ve sold 5 houses over the last 20 years, my experience has been pretty much what TigerDebaiter mentioned. The appraiser has always been selected and sent by the loan company that was providing the buyers loan, the loan company wants the business and has already agreed to make the buyer a loan, so they select appraisers that they are familiar with and know will being them back whatever appraisal the contract needs.
The appraiser wants to keep getting called often by the loan company so they make their appraisal match what the lender wants. One house I sold, the appraiser never pulled out any type measuring device, only spent about 6 mins inside and outside the house, sent the lender an appraisal $2000 above my contract price.
Last home I sold, I was asking about $15,000 more than I thought I could get, the appraiser did about a 20 min look around, sent lender an appraisal $11,000 more than I was asking, at closing I saw that the young buyers had qualified for some kind of special loan program and were getting $10,000 above contract for their loan amount, then I understood why there was an $11,000 unexpectedly high appraisal. So to sum it up, they can make it whatever they want to and can come up with comps to make it work.


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60
makersmark1
Auburn Fan
earth
Member since Oct 2011
9413 posts

re: How accurate is a home appraisal for the mortgage company?
Are you moving? If you are not moving, then You want county assessment for taxes to be lower.

When you sell, they will do the comps, etc.


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DawgCountry
Kennesaw St. Fan
Great State of GA
Member since Sep 2012
26947 posts

re: How accurate is a home appraisal for the mortgage company?
The appraisal Above the sale price isn’t an issue. The issue is when it appraises for less than the selling price. And now the bank has to worry about issuing a mortgage for a higher value than it could be worth


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