Buying & Selling Real Estate Discussion

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Home appraisal value purchase

Posted Aug 11 2022, 11:16

So I am trying to house hack my first home and I am closing on the property and got the appraisal back and it is the same as the purchase price at $340,000 and the seller is not willing no negotiate down on the purchase price and I have over $10,000 to rehab the home but I believe once the rehab will be done I can possibly sell it for $370,00. So should I back out of the deal or purchase the home even though I won’t have any equity in the home when I purchase 

Ogden, Utah

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Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
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Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
Replied Aug 11 2022, 12:10

@Kayson Rogers First, you can’t expect an informed seller to sell for less than appraisal, just like you wouldn’t want to pay More than appraisal.  Also, appraisals will typically come in at, or near, the purchase price even if the appraiser thinks it may be worth more…it’s just being conservative on their part.  I assume this is going to be a long term hold, the $10k is rather insignificant.

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Replied Aug 11 2022, 12:13

Agreed with @Wayne Brooks
You and the seller agreed on a purchase price.
The appraisal came back saying that is an appropriate purchase price and fair market value; no seller is going to drop his/her price because you want the property under market value.

If the numbers work (which they should, since you are already closing on the property,) proceed as planned.

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Scott Allen
  • Real Estate Agent
  • Columbus, OH
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Scott Allen
  • Real Estate Agent
  • Columbus, OH
Replied Aug 11 2022, 12:15

@Kayson Rogers See if the seller is open to extending the inspection period through an addendum for 2 days to go over some of the things that will need to be rehabbed, propose a seller credit or price reduction within the inspection period, try to meet somewhere in the middle, close the deal. Best of luck!

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Benjamin Aaker
  • Rental Property Investor
  • Brandon, SD
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Benjamin Aaker
  • Rental Property Investor
  • Brandon, SD
Replied Aug 11 2022, 13:44

The appraisal is a contrivance that your bank uses to help it make a decision on whether to offer you a loan or not. It is only one opinion of the value of the property. You need to make sure you have your figures right about the ARV (the after repair value) of 370k. If you do your homework correctly, then you'll have that difference (30k) in instant equity plus the equity you put in as a down payment. The appraisal shouldn't have anything to do with your valuation of the deal. It doesn't matter and you should be commended on coming to an agreement on a sale price that the appraiser approved.

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Corby Goade
  • Investor
  • Boise, ID
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Corby Goade
  • Investor
  • Boise, ID
Replied Aug 11 2022, 14:37

All good advice above, but even if your numbers above are correct, you'd lose money if you sold it for $370k. You should expect it to cost you around $25-28K in expenses to sell a property at that price. Beyond that, you haven't told us if you have another exit strategy- that info alone doesn't necessarily make this a bad deal.