When evaluating a property, I can have my realtor give me the sales listings from the MLS for comparable properties. These “comps” give me a pretty fair indication of the Full Market Value of the property I am considering.
When the “bank” appraisal is done in conjuction with a loan application, the appraiser will do the same thing. He will look for recent sales of comparable properties, then adjust the estimated value based upon specific features of the property.
Therefore, the MLS “comps” do give a fair approximation of the potential value of a particular property. You add or subtract value based upon your inspection of the condition and features of the property.
I never rely upon assessed value to form an opinion of market value. Assessed value is an artifical number used to establish the property tax base for the county.
I’ve notice nearly everyone, when speaking of a potential deal seems to know what the appraised value is. Where are you all getting that figure? I know the bank will do an appraisal if they’re financing you, but more seem to know at the time they’re making the offer.
I am in the process of buying a duplex and if I want the appraised value I have to have an appraisal done, at my expense. Who wants to pay $300 or so for every property they are interested in to find that out? Of course the realtor bases the selling (asking) price on THEIR appraisal, but that’s just done by comps.
They tell you you can get the market value from the tax statement, which I generally have anyway. But that means NOTHING.
For instance, on one their asking $59,000, (originally $69,000) and the market value is 27,000.
Another we bid on; originally $39,900, getting it for 32,900 and the market value is 29,000. I don’t get it!
As to who pays for the appraisal, in my contracts, the “other party” does (ie seller, if I am the buyer). My rationale (if asked) is that, until I close on the property, I don’t really NEED an appraisal (or survey)… if they REALLY balk, I will pick up the cost at closing.
My point is, if we can’t close on the property (thru no fault of mine), I dont’ need the appraisal, but they probably will , for whomever ends up buying it.
That way, we are not out of pocket up front.
As to where it WILL appraise, like someone below, I KNOW my market, and am seldom very far off the mark, In fact, that makes me really comfy in making offers.
Kathy, it’s important to know assessed value on the tax statement does not equal market value. The only time I look at the number now if when determining cash flow, not FMV. Like other’s suggested, look at what like-properties have been selling for, the closer to that neighborhood the better. I would also suggest to add on your PNS the following contingency: “Property must appraise at the stated purchase price or higher”. If it doesn’t this let’s you walk away.
Re: Appraised value-who’s appraisal? - Posted by MIke Oldfield
Posted by MIke Oldfield on April 12, 1999 at 03:39:05:
Right!
Most people I have run into are not careful about distinguishing between assessed value and appraised value. Drive me nuts too. With a little further inquiry I have found they are usually referring to the assessment. My reaction is the same as yours. Who cares about the assessed value. I fight my assessments every time they change and I almost always win. Which means the tax assessors are usually incompetent.
What works best for me?
In my area I already know the market pretty well so I don’t worry when buying here. Thanks! Helps a lot right? Read On!
When I am in a new area, I ask for every listing (Short form) of the similar properties in the area. I.E. every duplex in your area. This will give you the asking price of all the duplexes in your town. Knock them down by 10 to 15% and you will have the market value.
What’s most important though is invest for cash flow cash flow cash flow. If it doesn’t make money on day one, I pass. And I never pay more than 80% of the asking price on my worst day. I prefer 50%