Why are homes in my part of east Texas all priced above appraisal? Even my current home would sell at least $30,000 above its appraisal. Is this normal? It's hard to really do the BRRRR model if everything is already priced above the appraisal. Any help or ideas?
@Dustin Crawford Are you sure the home are selling above appraisal? Anyone can list at any price, but the lenders will always use the lower of appraisal or purchase price.
So in your scenario of it selling $30k above appraisal, the buyer would have to bring that $30k to the table, plus their downpayment plus closing costs. I would be surprised if that was happening on a consistent basis.
Tom S. has a solid point. Where im at, homes started selling above MARKET price, and once people saw that, they started jacking up the prices, only to have to lower them later because they weren't getting any offers.. they were trying to get covid prices and then some, and it looked like it wasn't really panning out
Maybe you mean tax appraisal? If so, that number doesn’t mean anything. Vegas homes sell for double the tax appraisal everyday. If you mean bank appraisal, the above post is correct. I’ve paid over appraised value and I’ve had sales prices dropped to appraised price. Depends if it’s a seller or buyers market.
@Tom S. Yes, the homes are selling above the appraised value here in Palestine, Texas. For example, a 2/1 that I have been watching is listed for $75,000. The appraised value is $41,223. This is very common for my city. Homes will fetch well above their appraised value. Is my city just backwards or what? I'd be happy to send screenshots of the information. I am very new to the real estate business, and am trying to do my fair amount of research before pulling the trigger on a property.
Because the housing inventory is low right now
That’s ok. It sounds like lots of responders don’t know the difference either. :-)
I have also seen this. It has to do with what sellers are willing to pay. If investors or people looking to move away from California for example are buying houses here (and they are constantly), it is hard to compete with their offers of 15k over the asking price. I ran into that problem multiple times where I put in a bid a few thousand less than asking price that I KNEW they would accept, only to have an out of state investors blow my offer out of the water.
@dustin crawford....do you mean tax appraisal? or bank appraisal? Two very different things. Tax appraisals to me are useless in determining the value of a house. Can be way high or way low or spot on, and they can change with wide swings depending on the activity around you. Really not worth your time even looking at those in my opinion. Now bank appraisals are a different thing, they can very too above or below sales price, but I think in general in most cases are close. Expect to spend $450-$600 for a bank appraisal.