Home buying thread

Comps have to be closed sales. You can try to argue a certain sale is more relevant to your home than another sale but you can't "manufacture" comps in that appraisers have set guidelines for what they can use and again it has to be a closed sale.

I've been in the real estate industry for 20 years now and I can count on one hand the amount of times in the 1000+ deals I've done where someone said "fuck it" and paid beyond the appraised value. More than likely all of them would have ended up making money but to say a person will not give a shit that they paid more for a "thing" than what other people tell them it's worth isn't common.

Bandwagon said:

*everyone* I've ever talked to about home buying in person (in the pac NW) has said that the sale price is always higher than the appraisal. Most of that is in two fast growing towns, though. Is sale price matching the appraised price unique for your general area or certain areas in particular? Cities?

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That has to be pretty unique to that market then. I mainly do deals in LA but have recent deals in SF, Dallas and Austin and I can't remember the last time an appraisal came in low on a purchase. The appraiser has to certify on the appraisal he/she reviewed the purchase contract, they know what you are paying and in essence they are just trying to justify the price you are paying. 9 times out of 10 the appraised value and the purchase price is one and the same. Furthermore, at least for the market I'm in, appraisers have been squeezed by AMC's and are paid shit per appraisal. They need to do double or triple the work to make the same money so they're not going to spend more time than needed if they meet the basic requirements.

I also think it's somewhat impossible to have every deal be above appraised value unless the houses in question are being sold in sequential order in 60-90 day increments at least 25% higher than the last sale. Once someone pays above market that is then a comp for all the other houses in that neighborhood. That doesn't mean they'll all be able to sell for that higher price but if one does you then have a data point + appreciation factor to go towards the higher price.

A working vineyard or winery isn't a comparable for a residential house. Without going back through this thread to see exactly what type of property you are looking for I'll assume you're looking for a property with acreage. Even in my limited USDA knowledge/experience they are still appraised as residential houses that have the ability for a working hobby farm with the main comparable being the dimensions of the house and the lot size. It's two completely different things that while tangentially related (cost of land, jobs, etc) they aren't used as a basis of determining value. The vineyard/winery pricing is going to be based on income potential and the possibility of paying more than before always exists based on what the owner thinks they can make on the property. That's not the case with residential as you are actually living in the property or renting it out at market rates which isn't enough income typically to alter the valuation method such as with a 30 unit apartment building rented to section 8 vs. high end tenants.

Bandwagon said:

I just asked my boss (surveyor) and this was his response. He does consulting for the legal process and for disputes, as well as surveying. Usually hired by lawyers directly.

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There's also laws in most states that prevent a re-assessment of value as tax rates can only increase a certain percent per yer. That typically gets reset upon deed transfer but up until then in a lot of cases assessed value has little relation to what the property is actually worth as it's not being taxed on that anyway.