Anyone know anything about home valuations?

Javery

Javery

CAGiversary!
Feedback
20 (100%)
I am looking to refinance my mortgage and as part of the process the bank sent over an appraiser. After looking at the house, they emailed me his number and it was almost $200k higher than I was anticipating. This number is so insane that if someone offered me that amount of money I'd be out of the house by the weekend - especially in this market.

How accurate are these guys?

I thought he would be conservative and it went just the opposite. Since we moved in we redid the attic into a 4th bedroom - it has a full set of stairs to get up there - and replaced all the crappy doors in the house with nicer 6-panel ones and some new hardware. That's about it other than some stuff outside (new driveway, walkway, new garage doors, etc.). I just find it hard to believe we've added that much value to it...
 
You can get 100 different appraisers to look at your house and you will get 90 different values. Part of the problem we have gotten into with the housing market is due to the basically unregulated appraisers and the effect that their "values" of a property have on the ability to get a loan.

There is also a huge difference between a houses appraised value and what its actual market value is.

But hey, if he gave you a huge appraisal, you have a lender ready to give you a deal on a loan of that size and you are going to refinance then you should look at the possibility of paying off any other debt you have with the equity of your house.
 
Mortgage appraisers usually do a half-assed job. They will do a "drive-by" appraisal and just pick a number based on the neighborhood and the appearance of the home. It's fine for refinancing but I wouldn't rely on it for any other purpose. The reason so many people are upside-down on their homes now is that they refinanced based on unrealistic appraisals and took out all the equity they could. When the market started adjusting downward to show the true value of those homes, people were left owing more than their homes were actually worth.
 
[quote name='Machine']Mortgage appraisers usually do a half-assed job. They will do a "drive-by" appraisal and just pick a number based on the neighborhood and the appearance of the home. It's fine for refinancing but I wouldn't rely on it for any other purpose. The reason so many people are upside-down on their homes now is that they refinanced based on unrealistic appraisals and took out all the equity they could. When the market started adjusting downward to show the true value of those homes, people were left owing more than their homes were actually worth.[/quote]

Careful with your broad over-arching stereotypes. My father has been a real-estate appraiser for 20+ years and doesn't fit this mold (never done a drive-by, etc) and he takes a very conservative approach to valuation (closer to market value).

I will agree with others in 1 thing: you WILL get 100's of different valuations. And banks more and more these days are asking for "drive-bys" and other type appraisals in order to pay the appraiser less but still charge the end borrower a full appraisal fee...

I agree with some of the earlier posts though - take advantage of the inflated value and borrow as much as you need to cover all debt at amounts higher than your refinanced amount would be to save yourself a lot of interest in the long run...
 
Appraisers hired by banks usually give a figure that suits the bank. The bank wants that refinance business, so they want a high appraisal. They probably figured that appraisal partially based on you, your income, and your liquidity.

Put it on the market if you like, just to see. I'd be surprised if you get an offer anywhere near the ballpark that this appraiser quoted. Also, you can always hire an independent appraiser to see if the numbers match. Talk to a real estate agent to find an independent.

One thing I would be worried about is those property tax values, if you refinance at the higher appraisal value, when you county assessor looks at it, will he use the higher value for tax purposes?
 
Just like others said, definitely depends on your appraiser. If you don't think you'll need to refinance, then you may want to consider taking out the loan to pay off any debts you have. Although, if down the road you want to refinance, someone could appraise your home and figure you to be upside down. I guess that depends on what interest rate you have now.
 
Well, since interest rates are low I thought it would be a good idea to refinance and get a lower rate. I pay more than the monthly payment due every month and the line of credit (which I only have to pay interest in) gets paid down considerably every month too. If I refinance, I can move 85% of the line of credit into my regular mortgage, pay the same amount I've been paying every month and then in 2 years the line of credit would be completely paid off and I'd be saving that $800/month at that point in time. My house and my car are the only things I owe money on (I don't carry a credit card balance and my school loans are paid off). It just seemed like a very high amount to value the house at and I'm not sure what the bank gets out of it.
 
[quote name='javeryh']Well, since interest rates are low I thought it would be a good idea to refinance and get a lower rate. I pay more than the monthly payment due every month and the line of credit (which I only have to pay interest in) gets paid down considerably every month too. If I refinance, I can move 85% of the line of credit into my regular mortgage, pay the same amount I've been paying every month and then in 2 years the line of credit would be completely paid off and I'd be saving that $800/month at that point in time. My house and my car are the only things I owe money on (I don't carry a credit card balance and my school loans are paid off). It just seemed like a very high amount to value the house at and I'm not sure what the bank gets out of it.[/quote]
The bank gets your business. Your re-financing fee, your interest. I'm sure they're not expecting you to default, looking at you as a low credit risk, and anything they can do to beef up their low-risk portfolio they'll do.
 
[quote name='Wlogan31']Careful with your broad over-arching stereotypes. My father has been a real-estate appraiser for 20+ years and doesn't fit this mold (never done a drive-by, etc) and he takes a very conservative approach to valuation (closer to market value).

I will agree with others in 1 thing: you WILL get 100's of different valuations. And banks more and more these days are asking for "drive-bys" and other type appraisals in order to pay the appraiser less but still charge the end borrower a full appraisal fee...

I agree with some of the earlier posts though - take advantage of the inflated value and borrow as much as you need to cover all debt at amounts higher than your refinanced amount would be to save yourself a lot of interest in the long run...[/quote]

I'm sorry if I wasn't clear on this issue - I was referring to bank appraisers. I know some professional appraisers that do great jobs and I would completely rely on their work. Bank appraisers, on the other hand, are not as meticulous in their work and I would never rely on a mortgage appraisal. Of course, this is based on my experience and the area I live in - things could be completely different in other parts of the country.
 
The best way to find a good appraiser is to talk to the other people you know with a house and get their recommendations. Also, does your city/county/whatever have any sort of website where you can look up their valuation for your property (do a google search for your local appraiser's office or register of deeds office). Might be a good comparison with what you have already (or at the very least you can average it out and get an estimate yourself that way).
 
[quote name='NTolerance']Must be worth at least, what, $750K? Isn't that what it takes to buy a starter home these days?[/quote]

Seems like it... in my neck of the woods anyway. My house sits on 0.14 acres and is only 1,250 square feet (plus an attic bedroom with sloped ceilings, a basement with a 6 foot ceiling and a TV room off the side of the house - 7ft. wide!). I also have a detached 2 car garage. I mean I can walk to the train station and be in downtown NYC in 40 minutes and the school system is really good... but still...
 
You must log in or register to reply here.
bread's done
Back
Top