[QUOTE=javadog;7353532] x1,000 bajillion.

Lets also consider that the buyer of the property was willing to pay more than ANYONE else on the planet. By MRM's presumption every buyer of real estate got a raw deal. Further you might consider that the buyer will instantly go from idjut who paid more than anyone else was willing to pay to trusted advisor on valuation of all future homes for sale in that area.

My perspective is that residential home appraisals don't value the asset, they predict trends. There is a space there for replacement cost but the land is the fudge.

Everyone who bought property based on appraisals between 2002 and 2008 did pay too much. Anyone who wants to pay more than an appraisal either doesn't care about fair market value or they are speculating that the market will catch up to them. Either way, paying more than an appraised value is over-paying for the property based on fair market value. Is it worth more to you than anyone else in the world? Fine. Spend your own money on it and take the risk yourself. Don't expect someone else to loan you the money to but something that is under water at the time of purchase. We've done that already and it wasn't a good idea.

Seems 1st appraiser may have tried to do OP a favor by getting the value as close to asking price as was reasonable/justifiable. $10k diff on a $400k house is not an insurmountable obstacle.

Rather than question it and have it reviewed I would have used the $405 as a bargaining tool to get the house for less or some other seller concession to make the numbers work with the bank.

Failing that if I really wanted the place and could swing it I would have put in the extra $10 to keep the mortgage commitment.

If I could not swing the $10 I'd keep shopping.

How long was the property on the market? Had the price been reduced in the past or was the $415 the opening asking price?

OP did have options and may very well have tried them but disputing the charge because he did not agree with his paid professionals opinion should not have been one of them. They are not obligated to tell you what you want to hear just because you are paying them. If that were the case what value is there for anyone buyer/seller/lender in getting an appraisal?

When making an offer, one should always at least attempt this statement, "...for the purchase price or the appraised value, whichever is less." If accepted by the seller, it removes that problem. Two appraisals within 10% aren't out of line. As well, for some time now, one (a buyer or seller) can never engage an appraiser. It must be done by the lender.

I'm getting quite an education on the home appraisal racket, er business.

"The appraisers are doing their best to determine what an "average" buyer is going to pay for the properties, and it's a bit of a guessing game because every buyer and every house is so different."

The potential buyer has to pay $300 -$400 a crack for professional guesses? How many guesses are enough?


" The appraisal process is generally too simplistic to determine a real value. Plus, the appraisers that I have known really didn't have a sufficient understanding of house construction and construction/renovation/repair costs to really understand what they were doing."

Sounds like these highly paid professionals don't know what they're doing, but they get paid anyway, and paid again if the lender doesn't like their work.

"One other thing too: the methodology that the original appraiser used may have been a bit lenient compared to what the lender wanted to see."

So if the lender doesn't like the outcome it's OK, he can just spend more of the buyer's money, roll the dice, and see if he gets a better number?

"I would ask your loan officer why they thought getting a field review was a good idea if the appraisal was that questionable. They kind of threw YOUR money at the deal."

They threw more of YOUR money at the deal. Makes you wonder what the relationship between the appraiser and the loan officer is. Are there any arm's length regulations that keep the loan officer from ordering his wife/father/brother-in-law/girlfriend to make repeated appraisals for clients to pay for? There was a thread earlier about what profession is the most reviled. From what I'm learning here the home appraisal racket would be right up there if people bought houses more often.

Couldn't agree more Patrick.

Appraisals started off by protecting the bank, and only the bank. A person wants to sell a house at a price, a buyer wants to buy the house at that price....whats the problem??

I know both sides of the housing bubble arguments but I never understood why there has to be independent appraisers at all? The bank should employ people they trust to determine value to protect them in the case that someone walks away from the house, they aren't left with a worthless house. It should be up to the bank to protect themselves...but I guess who cares when they are too big to fail :/

Hogwash, sir.

This presumes that the appraisals are always correct, which we both know is not the case. In fact, I'd lay you odds that, at this point in time, there are more appraisals coming in at under "market value" than over market value.

JR

pretty much anytime someone buys a house, it's because they value it higher than everyone else. Think about an auction where 25 buyers bid, and one guy gets the item... that one guy saw more value than the other 24... does that mean he overpaid?

I just sold a house this week that had an appraisal of 205k. I had three offers north of 215. Are all three buyers "wrong"?