Am I Overpaying? Is the listing overpriced? What is the house worth?
All questions, or variations of questions, most buyers ask when buying a house in Lake Orion, MI. They are valid questions with not easy or pat answer. The value of the home depends on your point of view.
Webster defines "value" as "a fair return or equivalent in goods, services, or money for something exchanged" or "the monetary worth of something."
Out of everything that is currently on the market: Is it the best house for you, with an asking price you would be comfortable paying? If you were assured the asking price is fair, would you feel like you were settling with this particular house? If the house is everything you were hoping for in your price range, then you're not overpaying.
Websters defines "market value" as "a price at which both buyers and sellers are willing to do business."
Now that doesn't mean it will appraise. Appraisals are usually needed to get a mortgage.
My definition of "appraised value" is "a price determined by a licensed appraiser who is following both government and lender guidelines."
Some of the rules appraisers have to follow for most residential loans, that can and do affect "value" are (among others):
-
they are limited on the amount of value they can give outbuildings
-
they are limited on the amount of value they can give to land when buying a home on acreage
-
they are limited on the amount of value they can give for upgrades such as top of the line windows, 50 year warranted roof, finished basements, crown molding, upgraded cabinets, flooring, light or plumbing fixtures.....
Other factors that can affect the appraised value are the lack of comparable sales. If you are selling a custom lakefront home on a lake that has had mostly cheap foreclosure sales, converted cottages, the appraisal could come in low. Especially if the house is on one of the more desirable lakes- the sold comps for more custom homes may come from a less desirable lake and there's really no way to adjust value for the lake.
If you are buying a house with a hundred thousand dollar indoor arena and another fifty thousand in oak fencing and 20 acres, the lender expects the seller to give little to no value to the barns, fencing and land.
Do these things have value to the consumer? Are there things about the house you want, that have value to you, that an appraiser may not consider? If so, are you able and prepared to pay the difference if the appraisal comes in below the agreed upon sale price?
If you are unable to pay the difference between appraised value and what the seller is willing to sell for, then we would need to determine an approximate value an appraiser would come in at and not exceed that price in negotiations.
If you are able to pay the difference, you need to decide what the value of a particular house is for you. Basing your purchase solely on appraised value can cost you more in the long run.
Jackie Hawley
Keller Williams Realty, Clarkston MI
Cell: (248) 736-6407
Email: Jackie@JackieHawley.com
Comments(3)