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I am doing a cash out refi on my house and am about to have the appraisal done.  Any tips to maximize value for an appraisal?  I watched a couple youtube videos but just wondering what people with some experience might know.

One issue I have is that we have been doing some minor renovations the past week.  We have our main floor painted but have not put the baseboards, door trim, or crown moulding up yet, and likely will not be able to do this before the appraisal.  I have all the pieces sitting downstairs ready to go, but can not do it in time.  How big of an issue would that be?

Otherwise I am just going to make sure the place is clean and have the wife and kid get out of the house for a couple hours.  

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I wouldn't worry too much about cosmetics. Appraisers are all about year built, square footage, # of BRs and BAs and comps in your area.

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7 minutes ago, Joe Mammy said:

I wouldn't worry too much about cosmetics. Appraisers are all about year built, square footage, # of BRs and BAs and comps in your area.

Agreed. Had mine done late last year. 

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35 minutes ago, Joe Mammy said:

I wouldn't worry too much about cosmetics. Appraisers are all about year built, square footage, # of BRs and BAs and comps in your area.

I figured as much.  It's pretty obvious it isnt because we just dont care about the house and trashed stuff.

Just wondering what things COULD be done to maybe increase the value, even if just a couple grand or so.  Stuff that wont cost money that is.

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Cleanliness doesn’t matter. It’s possible you’ll need a final inspection before your closing to confirm repairs/renovations are complete, seems unlikely for the work you are doing though. 

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4 hours ago, ghostguy123 said:

I figured as much.  It's pretty obvious it isnt because we just dont care about the house and trashed stuff.

Just wondering what things COULD be done to maybe increase the value, even if just a couple grand or so.  Stuff that wont cost money that is.

Nothing you'll be able to complete if you don't even have the time to put your baseboards and molding up.  From my limited experience, what Joe said above is true.  Unless you are adding square footage, there's not much you can do that will affect it.  Is the bank providing the appraiser?  Maybe you could hire someone you know/have connections with that could help nudge the value towards the higher end of whatever range your home is in?

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Full disclosure- I am a licensed FL Realtor but I am basically retired now and my license is voluntary inactive. I was active in Destin for 10 years and sold many investment properties. I hate to say it but I have less respect for appraisers than I do for most realtors. For some absurd reason the appraiser gets a full gander at your sales contract. YES, he knows the agreed upon sales price. It's a racket. The lender hires an appraiser from a bank of appraisers in a general area and supplies the appraiser with the final sales contract! Appraisers all compete with a basic fee that the lender weighs when selecting one- 9 times out of 10 the low bidding appraiser gets the gig.

I had a "buddy" in Destin who I would refer appraiser opps to. Deals without a lender involved. He'd ask me, "high or low?"

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If you have an unheated extra room (mud/breezeway) hardwire an electric heater and then they will count it as square footage.  Any room without heat doesn't count.  At least up here that's how it works.

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1 hour ago, Joe Mammy said:

Full disclosure- I am a licensed FL Realtor but I am basically retired now and my license is voluntary inactive. I was active in Destin for 10 years and sold many investment properties. I hate to say it but I have less respect for appraisers than I do for most realtors. For some absurd reason the appraiser gets a full gander at your sales contract. YES, he knows the agreed upon sales price. It's a racket. The lender hires an appraiser from a bank of appraisers in a general area and supplies the appraiser with the final sales contract! Appraisers all compete with a basic fee that the lender weighs when selecting one- 9 times out of 10 the low bidding appraiser gets the gig.

I had a "buddy" in Destin who I would refer appraiser opps to. Deals without a lender involved. He'd ask me, "high or low?"

So how do they do a cash out refi?  No sales price to work with.  Does that mean they will actually do work and come up with a real number?

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When I REALLY needed the appraisal to come in right, I left a note on the kitchen counter with a list of the upgrades we had in the house, along with their value/cost, and comps in the area, and concluded with "based on these, I think the value of the house is at least XXX".  His appraisal came in right on the nose.

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They're basically flying by.

What others have said I would go with and add just obviously double check if you dont agree.

 

I had a heloc application 

They did a "drive by" appraisal. 

Your house is worth tree fiddy, the lender tells me.

I'm like...uh....I paid 450 16 months ago. Do they have the right house?

Yea....hmmm....I ask for an appeal.

Tree fiddy five

Lol...

Then I realize. 

His "drive by" was on google Avenue which still shows the house at 1200sft...before it was knocked down 10 years ago and rebuilt to new.

So I send them a link to google indicating 1200sft and a copy of my appraisal for 450 2600sft

He now comes out and does an actual appraisal....459

 

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Not much you can do.  There may be a downward adjustment (albeit, minimal) for the condition of the unfinished work since the comps will, presumably, be in market-ready condition.

Also, while you don't have a sales price, you do have an amount that you are requesting, right?

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18 minutes ago, Bob Loblaw said:

 

Also, while you don't have a sales price, you do have an amount that you are requesting, right?

No not really.  I said I planned to take 80% of the loan to value amount.

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All that matters to an appraiser are the basics.  Tax sq ft.  Lot size.  Bedrooms.  Baths.  Finished basement.  Garage. etc.

About the only things you can do are:

1) have a list of improvements in the past 7 years.  Anything older than that is usually not considered an improvement anymore (or at least a recent improvement).  So if say you added a patio, redid a bathroom, etc. make sure they know it

2) you can pull some comps and give them to them in hopes they use them. Some do, some don't.   They will obviously pull the ones right around you within the last 3 months.  But sometimes you can drop one on them they weren't going to use, and you never know.

3) while cleaning up doesn't really help a lot for raw value, it doesn't hurt either.  They are supposed to take pictures of every room.  Make the beds.  Clean the kitchen.  Simple things.  Cause all of that does get uploaded to underwriting, and if something is in doubt the house appearance can make a small difference.  They may do a drive-by appraisal, but it's very unusual except on HELOCs.

I've had 1 house of like 300 not appraise in 12 years.   When there is a sale they do everything they can to hit the appraised value.  In your case it's probably gonna be appraised completely on the nearest 3-4 sold properties no matter what you do

Edited by Brunell4MVP

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9 minutes ago, Brunell4MVP said:

All that matters to an appraiser are the basics.  Tax sq ft.  Lot size.  Bedrooms.  Baths.  Finished basement.  Garage. etc.

I have a really dumb question - you list sq. footage and finished basement separately.  If your house has a finished basement does it not go towards sq. footage of the house?  

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2 hours ago, ghostguy123 said:

Not going to be a drive by.  He will be inside doing measurements

compare what he comes up with what the assessor has.  Assessor had my house 500 feet more.  Made him come out and measure it and had taxes reduced.

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1 hour ago, AAABatteries said:

I have a really dumb question - you list sq. footage and finished basement separately.  If your house has a finished basement does it not go towards sq. footage of the house?  

It does not count towards sq footage.  

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1 hour ago, Brunell4MVP said:

In your case it's probably gonna be appraised completely on the nearest 3-4 sold properties no matter what you do

Thing is, not many comparable properties have sold around here for a while, and the ones that have are on streets where prices are either obviously higher or obviously lower than if they were on my street.

Gonna be interesting .  Guessing anywhere from 140k-180k.  

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1 hour ago, ghostguy123 said:

It does if it has access to the outside such as a walkout.  

It can and it may in your state/county but that’s more of an exception than a rule.  Many lenders only consider the above grade living area in the sq footage.  If any wall is below grade then it’s usually consider below grade.  

Here's what mortgage giant Fannie Mae has to say: "Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the living space. Fannie Mae considers a level to be below grade if any portion of it is below grade, regardless of the quality of its finish or the window area of any room."

 

 

 

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13 minutes ago, ghostguy123 said:

Yeah probably.  So how do I help scam a higher value?

Envelope full of 20s

Hire a hooker to be ready or insource this to your wife

Hire a private investigator to follow the guy and lay out compromising picture of him in your family photo frames.  

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51 minutes ago, Lion to myself said:

It can and it may in your state/county but that’s more of an exception than a rule.  Many lenders only consider the above grade living area in the sq footage.  If any wall is below grade then it’s usually consider below grade.  

Here's what mortgage giant Fannie Mae has to say: "Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the living space. Fannie Mae considers a level to be below grade if any portion of it is below grade, regardless of the quality of its finish or the window area of any room."

Yeah, we have a house we have a contract on that has a finished basement with walkout to a back porch and the back yard.  We are in the process of getting the appraisal done.

So a finished basement doesn't count for square footage but if there's a bedroom and bathroom in the finished basement those do count toward an appraisal?

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1 minute ago, AAABatteries said:

Yeah, we have a house we have a contract on that has a finished basement with walkout to a back porch and the back yard.  We are in the process of getting the appraisal done.

So a finished basement doesn't count for square footage but if there's a bedroom and bathroom in the finished basement those do count toward an appraisal?

Fannie Mae wouldn’t consider a basement regardless if there is a bathroom and/or bathroom.  But it depends on why the appraisal is being done and the state you live in.  If you have a realtor or have worked with one in the past, they would be a good person to ask what your state does. 

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6 minutes ago, Lion to myself said:

Fannie Mae wouldn’t consider a basement regardless if there is a bathroom and/or bathroom.  But it depends on why the appraisal is being done and the state you live in.  If you have a realtor or have worked with one in the past, they would be a good person to ask what your state does. 

In Texas people put "basements" in to avoid them showing up on the tax rolls.  

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14 hours ago, Joe Mammy said:

Full disclosure- I am a licensed FL Realtor but I am basically retired now and my license is voluntary inactive. I was active in Destin for 10 years and sold many investment properties. I hate to say it but I have less respect for appraisers than I do for most realtors. For some absurd reason the appraiser gets a full gander at your sales contract. YES, he knows the agreed upon sales price. It's a racket. The lender hires an appraiser from a bank of appraisers in a general area and supplies the appraiser with the final sales contract! Appraisers all compete with a basic fee that the lender weighs when selecting one- 9 times out of 10 the low bidding appraiser gets the gig.

I had a "buddy" in Destin who I would refer appraiser opps to. Deals without a lender involved. He'd ask me, "high or low?"

I hear ya.  My wife and I have a small (~900 sq ft) summer cottage - no heating or cooling.  Plain vanilla place, but with lifetimes of memories.  We share ownership with my two sisters and their hubbies (place was passed down after both our parents had died).  Younger sister and BIL announce out-of-the-blue in August that they've bought their dream house ...a full-year, $1M+ home on a lake - our same lake.  So now they want a buy-out to exit the family cottage, which is fine.  But BIL (a true cheapskate and wheeler-dealer) doesn't like the fair price we offer and goes and gets an appraiser.  Based some Zillow pricings we saw, we figured our cottage is worth, maybe, $240K or so.  The appraiser uses four comps that are all $400K, three- or four-season homes (not summer cottages) and prices us at $360K ...industry standard not to deviate by more than 10%.  I'm convinced my BIL gave the appraiser a "go high" signal.  Current status is no resolution and what's probably permanent damage to the sibling relationships.  :hot:  I'm still considering filing an official complaint about the appraiser.  The comps were 2-3 years old (inappropriate) and one comp where the sale hadn't even finalized yet.  He worked way too hard to make $400K his starting point.

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14 hours ago, Joe Mammy said:

Full disclosure- I am a licensed FL Realtor but I am basically retired now and my license is voluntary inactive. I was active in Destin for 10 years and sold many investment properties. I hate to say it but I have less respect for appraisers than I do for most realtors. For some absurd reason the appraiser gets a full gander at your sales contract. YES, he knows the agreed upon sales price. It's a racket. The lender hires an appraiser from a bank of appraisers in a general area and supplies the appraiser with the final sales contract! Appraisers all compete with a basic fee that the lender weighs when selecting one- 9 times out of 10 the low bidding appraiser gets the gig.

I had a "buddy" in Destin who I would refer appraiser opps to. Deals without a lender involved. He'd ask me, "high or low?"

Not to defend the appraisal industry, which has some pretty massive problems, but there are a couple points to consider here. First, you get what you pay for. Banks pay these guys a couple hundred bucks now? They have to drive by, maybe do a walkaround, pull comps and write a report. You can’t expect high level analysis for that.  Secondly, a purchase agreement is probably the best evidence of value, assuming its arms length.  The appraiser has to assume the deal is legit - he’s not an auditor.  Comps are never perfect, so what better indicator of FMV is there than an agreement between a willing buyer and seller? 

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20 minutes ago, tri-man 47 said:

I hear ya.  My wife and I have a small (~900 sq ft) summer cottage - no heating or cooling.  Plain vanilla place, but with lifetimes of memories.  We share ownership with my two sisters and their hubbies (place was passed down after both our parents had died).  Younger sister and BIL announce out-of-the-blue in August that they've bought their dream house ...a full-year, $1M+ home on a lake - our same lake.  So now they want a buy-out to exit the family cottage, which is fine.  But BIL (a true cheapskate and wheeler-dealer) doesn't like the fair price we offer and goes and gets an appraiser.  Based some Zillow pricings we saw, we figured our cottage is worth, maybe, $240K or so.  The appraiser uses four comps that are all $400K, three- or four-season homes (not summer cottages) and prices us at $360K ...industry standard not to deviate by more than 10%.  I'm convinced my BIL gave the appraiser a "go high" signal.  Current status is no resolution and what's probably permanent damage to the sibling relationships.  :hot:  I'm still considering filing an official complaint about the appraiser.  The comps were 2-3 years old (inappropriate) and one comp where the sale hadn't even finalized yet.  He worked way too hard to make $400K his starting point.

you know zillow pricing is almost always not close, right? 

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3 hours ago, ghostguy123 said:

Thing is, not many comparable properties have sold around here for a while, and the ones that have are on streets where prices are either obviously higher or obviously lower than if they were on my street.

Gonna be interesting .  Guessing anywhere from 140k-180k.  

This is where you may have an opportunity to influence the opinion of value - if you tell the appraiser info about the comps, point him toward the ones you want him to use and point out problems with the ones you don’t like. In many cases, they’ll be willing to consider info you provide. When we bought our house, it was very helpful to be there and explain why certain recent sales should not be used as comps. 

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Appraisers are weirdos.

The last one we did for a straight refinance (no cash out), the guy came over and I was home. Talked to him for a couple minutes while he walked around and took pictures and stuff. He straight asks me what I think it's worth and the /sf # I have in mind. I tell him. He tells me "well I've seen this floor plan in this neighborhood and it really doesn't hit that number". I then tell him about our 5 figure covered patio + fireplace addition we just did and he tells me "Well that's nice I guess but I just throw out a $100 pop up tent from Walmart and I'm good".

In my mind I'm cussing because the dude just seems like an ####### and there is no way I'm going to hit the number I want/need. 

He came in $5k over. :shrug: 

Edited by Worm
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Re basements

In California, in the eyes of the Assessor, if the "basement" is at least 7.5' high, is conditioned, has interior access to the rest of the house, then it is considered living space and is factored into the livable square footage.  Also, whichever floor has the kitchen, that floor is considered the first floor, and the floor below it is considered the basement.

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19 hours ago, CletiusMaximus said:

Not to defend the appraisal industry, which has some pretty massive problems, but there are a couple points to consider here. First, you get what you pay for. Banks pay these guys a couple hundred bucks now? They have to drive by, maybe do a walkaround, pull comps and write a report. You can’t expect high level analysis for that.  Secondly, a purchase agreement is probably the best evidence of value, assuming its arms length.  The appraiser has to assume the deal is legit - he’s not an auditor.  Comps are never perfect, so what better indicator of FMV is there than an agreement between a willing buyer and seller? 

Depending on type of loan and location residential appraisals typically range from $450-600. 

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11 hours ago, Worm said:

Appraisers are weirdos.

The last one we did for a straight refinance (no cash out), the guy came over and I was home. Talked to him for a couple minutes while he walked around and took pictures and stuff. He straight asks me what I think it's worth and the /sf # I have in mind. I tell him. He tells me "well I've seen this floor plan in this neighborhood and it really doesn't hit that number". I then tell him about our 5 figure covered patio + fireplace addition we just did and he tells me "Well that's nice I guess but I just throw out a $100 pop up tent from Walmart and I'm good".

In my mind I'm cussing because the dude just seems like an ####### and there is no way I'm going to hit the number I want/need. 

He came in $5k over. :shrug: 

Comps are more powerful than what he has seen in the past. If he is following the normal appraisal process (from your story, it sounds like he did) then the numbers trump his opinion. 

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20 hours ago, tri-man 47 said:

I hear ya.  My wife and I have a small (~900 sq ft) summer cottage - no heating or cooling.  Plain vanilla place, but with lifetimes of memories.  We share ownership with my two sisters and their hubbies (place was passed down after both our parents had died).  Younger sister and BIL announce out-of-the-blue in August that they've bought their dream house ...a full-year, $1M+ home on a lake - our same lake.  So now they want a buy-out to exit the family cottage, which is fine.  But BIL (a true cheapskate and wheeler-dealer) doesn't like the fair price we offer and goes and gets an appraiser.  Based some Zillow pricings we saw, we figured our cottage is worth, maybe, $240K or so.  The appraiser uses four comps that are all $400K, three- or four-season homes (not summer cottages) and prices us at $360K ...industry standard not to deviate by more than 10%.  I'm convinced my BIL gave the appraiser a "go high" signal.  Current status is no resolution and what's probably permanent damage to the sibling relationships.  :hot:  I'm still considering filing an official complaint about the appraiser.  The comps were 2-3 years old (inappropriate) and one comp where the sale hadn't even finalized yet.  He worked way too hard to make $400K his starting point.

 You have a $360K storage shed???:jawdrop:

Edited by Galileo
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22 hours ago, tri-man 47 said:

I hear ya.  My wife and I have a small (~900 sq ft) summer cottage - no heating or cooling.  Plain vanilla place, but with lifetimes of memories.  We share ownership with my two sisters and their hubbies (place was passed down after both our parents had died).  Younger sister and BIL announce out-of-the-blue in August that they've bought their dream house ...a full-year, $1M+ home on a lake - our same lake.  So now they want a buy-out to exit the family cottage, which is fine.  But BIL (a true cheapskate and wheeler-dealer) doesn't like the fair price we offer and goes and gets an appraiser.  Based some Zillow pricings we saw, we figured our cottage is worth, maybe, $240K or so.  The appraiser uses four comps that are all $400K, three- or four-season homes (not summer cottages) and prices us at $360K ...industry standard not to deviate by more than 10%.  I'm convinced my BIL gave the appraiser a "go high" signal.  Current status is no resolution and what's probably permanent damage to the sibling relationships.  :hot:  I'm still considering filing an official complaint about the appraiser.  The comps were 2-3 years old (inappropriate) and one comp where the sale hadn't even finalized yet.  He worked way too hard to make $400K his starting point.

As stated, Zillow is terrible.  My home is listed 120k less than what I paid.

These situations are so tricky with family.  I don't blame him for getting an appraisal. What you guys think is fair may be off. Obviously each party has their bias in the back of their minds.

Another way I would go is bring in a realtor familiar with that lake in to see what they would list it at. 

2-3 year comp is just dumb. I've seen comps used that are under contract though.

No offense, but I would side with the guy who hired a industry "pro" (shotty practice included) as opposed to what was probably a 30min google research.

How big is this lake where there are 1M homes and maybe 240k homes? Seems quite a disparity. Maybe that's normal for lake front property. 

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Zillow does more harm than good in having a clue what fair market value is. 

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1 hour ago, comfortably numb said:

As stated, Zillow is terrible.  My home is listed 120k less than what I paid.

These situations are so tricky with family.  I don't blame him for getting an appraisal. What you guys think is fair may be off. Obviously each party has their bias in the back of their minds.

Another way I would go is bring in a realtor familiar with that lake in to see what they would list it at. 

2-3 year comp is just dumb. I've seen comps used that are under contract though.

No offense, but I would side with the guy who hired a industry "pro" (shotty practice included) as opposed to what was probably a 30min google research.

How big is this lake where there are 1M homes and maybe 240k homes? Seems quite a disparity. Maybe that's normal for lake front property. 

I recognize that a couple of you ( @Getzlaf15, @Chadstroma) speak poorly of Zillow, but the prices they show in my neighborhood outside of Chicago are valid reflections of the market.  :shrug: It ain't perfect, but the other theme in this thread is that appraisers aren't perfect - and often show bias - themselves.

As to the lake, it's about a 2 mile circumference; spring-fed; all private ownership (so no public access), which allows for lake rules, weed control, fishing nights, etc.  It's Silver Lake, outside of Grand Rapids, MI.  Originally, basically all the lake homes were like ours - just summer cottages.  (My grandparents were one of the first on the lake 97 years ago.  This is the second cottage on our site; built in 1964.)  Over the last 20-30 years or so, many of the smaller cottages got bought out and have been replaced with year-round homes ..some really nice homes.  Maybe 10-15% of the joints are still small, summer places like ours.  As such, it is very hard to get true comps.  As a result, we've been comped against year-round homes and it's not a fair fight.  A couple are listed as similar footage, but they're on a slope with walk-out lower levels, and that 'below grade' footage isn't factored in to the comps.  

And @Galileo ...crazy, right?  Did I mention the place is not connected to any sewer or water lines (so well water) and has all original electrical and windows from the 60s?  And no garage - we just pull off the busy road and park on the grass.  [That all said, the generations of kids, including our two young grandsons, now, treasure the place.]

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32 minutes ago, tri-man 47 said:

I recognize that a couple of you ( @Getzlaf15, @Chadstroma) speak poorly of Zillow, but the prices they show in my neighborhood outside of Chicago are valid reflections of the market.  :shrug: It ain't perfect, but the other theme in this thread is that appraisers aren't perfect - and often show bias - themselves.

As to the lake, it's about a 2 mile circumference; spring-fed; all private ownership (so no public access), which allows for lake rules, weed control, fishing nights, etc.  It's Silver Lake, outside of Grand Rapids, MI.  Originally, basically all the lake homes were like ours - just summer cottages.  (My grandparents were one of the first on the lake 97 years ago.  This is the second cottage on our site; built in 1964.)  Over the last 20-30 years or so, many of the smaller cottages got bought out and have been replaced with year-round homes ..some really nice homes.  Maybe 10-15% of the joints are still small, summer places like ours.  As such, it is very hard to get true comps.  As a result, we've been comped against year-round homes and it's not a fair fight.  A couple are listed as similar footage, but they're on a slope with walk-out lower levels, and that 'below grade' footage isn't factored in to the comps.  

And @Galileo ...crazy, right?  Did I mention the place is not connected to any sewer or water lines (so well water) and has all original electrical and windows from the 60s?  And no garage - we just pull off the busy road and park on the grass.  [That all said, the generations of kids, including our two young grandsons, now, treasure the place.]

Zillow has a few areas I'm sure where they get accurate data.   I live in a non disclosure state and it's rare for them to be close.   Wild swings up and down

Appraisers are a weird bunch for sure.   Foe me as an agent, I'll get 1 in 40 that's totally anal and does everything by the book no matter what.  Like appraising a home for 252k when the buyer has beaten out six offers at 255k. Makes zero sense. 

I actually had one in October that had 4 offers at 245 and 246.   The appraisal came in at 218.  Felt so bad for that seller who went through with the sale because their new home was finished and they could not back out. 

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6 hours ago, tri-man 47 said:

And @Galileo ...crazy, right?  Did I mention the place is not connected to any sewer or water lines (so well water) and has all original electrical and windows from the 60s?  And no garage - we just pull off the busy road and park on the grass.  [That all said, the generations of kids, including our two young grandsons, now, treasure the place.]

It is a garage!  Are you sure that when you look out the window you don't see the main house right next to you?  For comparison, I live in a private lake community (although not directly on the water) in a year-round 2800 sq ft/4 BR home + finished basement that has a value in the same ballpark. 

Sounds like awesome memories and experiences for your family...can't put a price on that!  Good luck with your sister and BIL.

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6 hours ago, Getzlaf15 said:

Zillow has a few areas I'm sure where they get accurate data.   I live in a non disclosure state and it's rare for them to be close.   Wild swings up and down

Appraisers are a weird bunch for sure.   Foe me as an agent, I'll get 1 in 40 that's totally anal and does everything by the book no matter what.  Like appraising a home for 252k when the buyer has beaten out six offers at 255k. Makes zero sense. 

I actually had one in October that had 4 offers at 245 and 246.   The appraisal came in at 218.  Felt so bad for that seller who went through with the sale because their new home was finished and they could not back out. 

What is typical when the house doesn’t appraise for the purchase amount?  Buyer and seller split the difference or what?

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3 hours ago, AAABatteries said:

What is typical when the house doesn’t appraise for the purchase amount?  Buyer and seller split the difference or what?

I'm sure its different in every state, but here in Idaho,  the seller has the right to proceed at the lower price.   If they choose not to, then buyer can back out of the deal and get all earnest money back or they can  negotiate a new price.   Most of my biz is first timers who dont have the cash to negotiate.  So the sellers have always caved on my deals.  I'm sure there is more negotiation at higher price points.   

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I had an appraisal of my home done this past December for a small equity line of credit. My mortgage is currently $65,000 and the last appraisal done (2008 during the downturn) was $250,000. We have added another 1,400 sq. Ft. Since that time. The home is now a 4 bedroom, 3,100 square feet on 6 acres. 
 

My appraisal came at $255,000. I didn’t much care because it was just for the line of credit. Though the comps used were pretty crazy. A 4 bedroom manufactured home of 2,000 square feet on .5 acres. There was also a 3 bedroom, 1 bath on there. It was weird.

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55 minutes ago, Getzlaf15 said:

I'm sure its different in every state, but here in Idaho,  the seller has the right to proceed at the lower price.   If they choose not to, then buyer can back out of the deal and get all earnest money back or they can  negotiate a new price.   Most of my biz is first timers who dont have the cash to negotiate.  So the sellers have always caved on my deals.  I'm sure there is more negotiation at higher price points.   

Wouldn't this depend on whether the purchase agreement has a financing contingency?  Obviously, the seller can always reduce the price voluntarily, but if the buyer signed a purchase contract that is not contingent on financing, I would not expect him to have an out based on the appraisal.  The purpose of an appraisal in a residential home purchase, at least in every case I've seen, is for the bank's use in making a mortgage loan, not to determine purchase price.

 

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50 minutes ago, CletiusMaximus said:

Wouldn't this depend on whether the purchase agreement has a financing contingency?  Obviously, the seller can always reduce the price voluntarily, but if the buyer signed a purchase contract that is not contingent on financing, I would not expect him to have an out based on the appraisal.  The purpose of an appraisal in a residential home purchase, at least in every case I've seen, is for the bank's use in making a mortgage loan, not to determine purchase price.

 

I've not seen a cash deal subject to an appraisal.  Cant see a seller agreeing to let the buyer make a cash deal contingent on an appraisal.  

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13 hours ago, tri-man 47 said:

I recognize that a couple of you ( @Getzlaf15, @Chadstroma) speak poorly of Zillow, but the prices they show in my neighborhood outside of Chicago are valid reflections of the market.  :shrug: It ain't perfect, but the other theme in this thread is that appraisers aren't perfect - and often show bias - themselves.

As to the lake, it's about a 2 mile circumference; spring-fed; all private ownership (so no public access), which allows for lake rules, weed control, fishing nights, etc.  It's Silver Lake, outside of Grand Rapids, MI.  Originally, basically all the lake homes were like ours - just summer cottages.  (My grandparents were one of the first on the lake 97 years ago.  This is the second cottage on our site; built in 1964.)  Over the last 20-30 years or so, many of the smaller cottages got bought out and have been replaced with year-round homes ..some really nice homes.  Maybe 10-15% of the joints are still small, summer places like ours.  As such, it is very hard to get true comps.  As a result, we've been comped against year-round homes and it's not a fair fight.  A couple are listed as similar footage, but they're on a slope with walk-out lower levels, and that 'below grade' footage isn't factored in to the comps.  

And @Galileo ...crazy, right?  Did I mention the place is not connected to any sewer or water lines (so well water) and has all original electrical and windows from the 60s?  And no garage - we just pull off the busy road and park on the grass.  [That all said, the generations of kids, including our two young grandsons, now, treasure the place.]

I don't know what to tell you. I have been doing lending on residential property in and around Chicago since 2003. I HATE Zillow with a passion. The reason is because they are almost always significantly off. I have countless examples of this. Rarely does their stupid Zestimate come in with reasonable adjustments of an actual appraisal. All that Zillow is is a lead generation company that masquerades as a estimate and listing service (both of which they do very poorly). 

Here are two big examples:

1) The CEO of Zillow sold his home. How much did he sell it for? 40% less than what the Zestimate was. 

2) We bought our home in 2012. Zillow was significantly lower than our purchase price. We did an Equity loan a bit over a year ago. We got a drive by appraisal on it. It came in 25% higher than what Zillow showed. 

Yes, appraisals are done as something that is subjective and trying to standardize and make objective. It is imperfect and can still have a large amount of subjectivity to. However, Zillow just sucks. End of story. 

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1 hour ago, Getzlaf15 said:

I've not seen a cash deal subject to an appraisal.  Cant see a seller agreeing to let the buyer make a cash deal contingent on an appraisal.  

Why not? Protect the buyer. Unless there are two cash offers of the same amount of money and one has the contingency and the other doesn't does it matter? 

I have loans that we can waive the appraisal on in some instances. I still inform my clients that they may still want to get an appraisal as a way to mitigate any risk to them. Just like getting an appraisal. You are investing a lot of money into a property, spend a few hundred and make sure that you are getting all the information possible to make a good decision. 

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1 hour ago, Chadstroma said:

I don't know what to tell you. I have been doing lending on residential property in and around Chicago since 2003. I HATE Zillow with a passion. The reason is because they are almost always significantly off. I have countless examples of this. Rarely does their stupid Zestimate come in with reasonable adjustments of an actual appraisal. All that Zillow is is a lead generation company that masquerades as a estimate and listing service (both of which they do very poorly). 

Here are two big examples:

1) The CEO of Zillow sold his home. How much did he sell it for? 40% less than what the Zestimate was. 

2) We bought our home in 2012. Zillow was significantly lower than our purchase price. We did an Equity loan a bit over a year ago. We got a drive by appraisal on it. It came in 25% higher than what Zillow showed. 

Yes, appraisals are done as something that is subjective and trying to standardize and make objective. It is imperfect and can still have a large amount of subjectivity to. However, Zillow just sucks. End of story. 

No problem ...I appreciate the input.  From what you're sharing here, I think we've been talking apples and oranges.  My use of Zillow is to see sales prices.  I haven't focused at all on the Zestimates.  I can readily understand what you're saying about the inaccuracy of Zestimates.

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13 minutes ago, tri-man 47 said:

No problem ...I appreciate the input.  From what you're sharing here, I think we've been talking apples and oranges.  My use of Zillow is to see sales prices.  I haven't focused at all on the Zestimates.  I can readily understand what you're saying about the inaccuracy of Zestimates.

The comps is just public data that they bring in. I can't say that I have ever seen them get that wrong (but wouldn't be surprised either if they did). Their listings suck because they bring it in by third party vendors. You will see listings that have been sold for months on there and it can take weeks before a new listing shows up. Their valuation and listings services (which is really where their value is suppose to be) is for poo. They are pretty much just marketing.

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