Appraised home value vs. what I think I could really sell it for...Real Estate ques.

[BGCarrera32]

Hi:

Hoping the brain trust here can provide some insight...

The story goes like this: 8 years ago I bought my first house. I payed around $125k for it and still live here. Needed some work but it had space at the time and was perfectly functional. Over the years I've put in a large concrete driveway, remodeled the master bedroom and bath, I roofed it, sided it, finished the 3 car detached garage with heat; generally put a good chunk of change into what is now a very decent older house. What it lacks in cool stuff and fancier this-or-that it makes up in very clean, well kept, doesn't smell, etc.

The kicker here is that I did a home equity line in '04 to finance the roof, siding, (things it genuinely needed) taking out around $25k. So consider that the combined mortgages sit at $150k for the sake of discussion.

This year I decided its time to move on. I won't get into all the reasons why in this thread. I started to work with a realtor to figure out what I wanted and get my house sold. I'm not so naive to think my house is worth a huge amount of money, but based on improvements, looking at similar types of houses, etc. my house was $200k in my mind after 8 years (and yes I know the market has generally taken a severe turn down in the last 2 years.)

Here's the problem: I decided to have a conventional type real estate appraisal done on the house, such that if I were to receive an offer I could be sure that the buying party's bank would finance the cost of the house (I wanted a good read on the value of my house in advance). Now, very important point: because of "comparables" used in the appraisal, the house comes back appraised at $160k. When I had the house appraised in '04 for the HELOC, a different appraiser at that time made note that it was difficult to find comparables to our house. We have a 1 level house built in 1948, added on to and in no way looks like 1948 inside or out, and live in a neighborhood with split level, attached garages all around us. Our house is different with about 400 less square feet, and is not a 2 level house. When I purchased my house, I thought it was a good move because within a year we had 5 brand new houses built literally right next to us.

So, as I'm well aware the market is way off, I still feel like I get screwed on the appraisal end of this. I don't have an appraisal in hand that says I have 20% equity in my house after living here for 8 years, and feel stuck, because I really feel like I could get an offer on it for $190 or $200k. My concern is that this house is in the first time homebuyer bracket, so let's say we get the offer I need...the buyer is not likely to get financed for the full amount, and likely won't have $20 or $30k in cash hanging around to make up the diff.

Interested in any thoughts on how I might proceed with selling a house that I'm not confident the buyer's bank would fully finance. I may be here a year or two yet, but when I do sell I don't want to get totally hammered.

Even as I make a dent in my mortgages over the next couple of years, I still feel like I'll get hosed as I need this place to gain some value and help me into the next place. Yeah stupid for taking out the 2nd line I know...

[HardDrive]

What does zillow.com say on the value?

[KFC911]

I've never viewed my primary home as an investment (i.e. income generator) and imo, that's a good thing . Ya gotta live somewhere, and that's it's purpose. I've been in it for 15 years now (it's long been paid off), but it certainly wouldn't turn any heads with it's "appreciation in value" over that time period. Imo, that's a relatively good thing as my area hasn't been a "bubble", nor is it suffering the ills that have affected many areas of the country.

[turbo6bar]

If your home is a target for first-time homebuyers, you'll need to find a new appraiser to hit your price or accept that $160k.

Talk to the appraiser. They may have they insight you need. Is their estimate overly conservative or is your valuation overly optimistic?

[MFAFF]

Is the issue not two fold..

1) Investment in the new roof, sliding etc is effectively a zero sum game.. in that a good condition roof is a minimum to achieve the market value..so whether is brand new or ten years old but fully functional it brings little if any additional value over market rate..the same with the siding..

2) Are some of the works you have undertaken 'overkill'.. such as the larger driveway, heated three car garage in the market it would appear your home lies:- first time buyer... For instance if you feel that a first buyer would not have $20-30K to add to a loan is there going to be a huge demand to have a heated three car garage? If no then the fact it does have these features adds little or no market value. So again some of your captial spending on making this property your home does not perform well as an investment.

My feeling is that you should get at least a second opinion/ appraisal in order to understand what is being quoted and why and secondly I would do some market research myself to understand better the market into which this property could sit..this may focus the marketing effort and hence increase the potential seeling price. Remember realtors are 'broad- brush' merchants...its always worth 'helping' them do their job better on your behalf.

[onewhippedpuppy]

MFAFF makes good points. Just like common repairs on your car, a new roof or siding won't "increase" the value of your home. It WILL make it more attractive to a potential buyer, especially compared to older homes that need a roof or siding. Also that things you have invested in may not be appealing to the average buyer. Most people don't care enough to pay more for a heated garage.

Look at comps, lots of them. NOT appraised values, but actual sale prices of similar homes in your area. It's public information, for example I can look them up for Wichita on the Sedgwick Co. appraiser webpage. Your realtor can also provide you with this info. That is what buyers will look at to determine the value of your home, so you need to take the same approach. When the "location x3" saying is tossed about, that's why. Regardless how much better your house may be than the neighbors, if most houses in your area are selling for $100k, you aren't going to get $200k.

[Rot 911]

A real estate agent will come in and tell you what they think the home will list for at no charge. They are generally pretty close to the mark. See if their selling price is close to the appraisal. If so, that is what you are probably going to be able to sell it for.

[Porsche-O-Phile]

+1 on the comps. There has been so much abuse of the "appraisal" system in the last few years in order to promulgage the housing bubble, I don't even think they're largely worth the paper they're written on. Comp value sales - in the last 3-6 months ONLY are about the only thing I'd give serious attention to. An appraisal or a zillow number is really just a guideline that will get you in the +/- 35% ballpark usually. Not especially accurate in my experiences.

Best of luck to you. Now is certainly not a particularly good time to be in the market and it's going to get worse. Hopefully you get some good comparison values to go by.

[dmcummins]

I sold a house years ago when you actually had to have money down to buy. In order to sell to a first time buyer I had to loan them the money for a down payment. I then placed a second on the home.

They were good people and I wanted out. They payed promply and it worked out fine. It was only 10 grand so it was not the end of the world, but it was alot of money to me at the time, 20yrs ago.

[BGCarrera32]

Thanks for your feedback, all points noted and I agree with a lot of them. The new updates ala roof-siding-driveway etc. I threw in just to make note it is in nice shape.

The problem is my realtor walked through and said we should list in the high 190's-200, and I thought a little higher, but given the market came to agreement with her and understood the position. What I didn't expect was an appraisal at $160k, and the lack of comparables. That's the problem, comparing it to houses 2 or 3 miles away, out of my neighborhood...

So then I need to have a tactic to tell the buyers bank politely that it is worth the agreed upon price (hopefully high 190's), and you can see where I am stuck.

I would like to be the "house" that drives the other "comps" up but maybe I'm on crack...

[Hetmann]

Biggest influencers of price are kitchens and baths. Are these in good shape or tired looking? Make sure you de-clutter and paint whtever needs painting in neutral colors for best showings.

[RANDY P]

there is a possibility that the appraisal is off-

The only way to know for sure is to have the RE agent pull a set of comparables vs. what the appraisal is saying. Properties that have sold within the last 12 mos, preferably within 6 mos. that are similar to the subject, and within 2 miles of subject assuming the area is identical.

If that's not available find something close, then add or subtract estimated value (IE- extra driveway on comp 1 makes the house worth $5k more, so subtract $5k from comp 1 to make it comparable to subject) and the comps have to have been sold in last year to count.

If the lender finds more suitable comps in the area and the appraiser ignored more similar comps then that's usually what they'll go by.

Another note, depending on the situation of the sale of comps they may be or may not be suitable- for instance if a parent sells the house to son for 1/2 of value that comp doesn't count.

If the house was a FC and totaled and sold at a discount that doesn't count. Distressed unique situation sales don't count.

[onewhippedpuppy]

Go with the realtor, they know what houses REALLY sell for. Appraisers can be prone to opinion, and don't always reflect the market. If someone wants your house, comps will be one big factor that both they (and their bank) consider.