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How do appraisers base the value other than zip code comps?

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OllieLA

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I have an appraisal scheduled for Friday and am wondering how the appraiser is going to base the value of the home other than basic neighborhood comps per sq foot.  The area i am buying is HIGHLY competitive in this particular section of the zip code. So, basically the comps come out way lower by the zip code than they do by the neighborhood.  Also, this house is completely remodeled and gorgeous.
The appraiser is FHA and I am wondering how he will base his appraisal and if he will consider the highly competitive neighborhood comps and the condition of the house.  I see other similar homes that sold comparable to my offer in that area but if they are combined with the zip code comps then the overall comps come out much lower.
My offer was much higher than the listing price and this is a short sale.
So, I am hoping that the appraiser comes in close to my offer so that the bank
will not back out of the deal.  Or I pray they would negotiate for the appraisal price.
How can I have an idea of how he will appraise since the zip comps are all over the place?  I just have the 3.5% downpayment and the bank pays  3% closing so not a lot of room for negotiating with cash. 
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July 01 - Los Angeles
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Reba Haas, "reba_haas"

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Scott, my understanding of the FHA appraisal is that, yes, it "sticks to the house" but only for other FHA loans.tishala1 - appraisers go by either market value comps, replacement value (not likely in this case) or by income (used for multifamily and other commercial type properties typically).  So, in your case it will be market comps. Most appraisers try to stay within 1/4 to 1/2 mile radius of the subject property unless they cannot find comps within the 6 month past review timeline.They will compare amenities, but don't expect lots of updates to get the same values that they did a few years ago. There has to be pretty big differences between homes to get much additional value at this point. And, it could just come down to having over-improving for the neighborhood.I wish you luck though!
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July 03
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cthomas101

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"Don't forget to be awesome,"

I think I puked a little in my mouth, really?? I mean really?....

Really?
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July 02
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Scott Wilkie, "Scotte_123"

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The appraisor should be basing his comps off of homes as similar to yours as possible and as close by as possible, not all homes in a zip code.  The comps also need to be very recent however and this sometimes pushes out the search radius he will use for his comps.  Your agent should already have comps to give the appraisor that justify the price you offered.  This will help him the appraisor and help you as well.  
You also have several things going for you.  Once an FHA appraisal is done, it sticks to that house.  So any other potential buyers will have EXACTLY the same issue as you have.  Essentially the Appraisor has set the price for the home and the bank will have trouble getting any more that that price unless it can find a Buyer who will pay more which is unlikely. Another advantage is that the Bank WANTS to sell you the home at the higher price, it is in their best interest to do so.  If they balk at a lower appraisal you may be able to get THEM to  finance the home for you at the higher price.  They get to turn the bad loan into a good one and will be motivated to approve the higher number.  
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July 02
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Seth Miller, "MyRealEstatePro.net"

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Happy Thursday Tishala1,

You can stop stressing, or at least reduce your stress ;). They will not go by zip code. They are suuppose to draw their results from the final sales price(s) of the most comparable property to the one in question. So if it is in a different neighborhood, it shouldn't be considered in the appraisal. They usually try to base their comps off the Track #, so as to be certain they're comparing similar properties.

You are correct in your understanding that it is very competitive out there. I'm not certain which neighborhood you're specifically referencing, but most Los Angeles areas are in a unique situation in which inventory is low, and a large percentage of the market is turning over every month putting us in a seller's market where it is a great time to buy. Be glad you got into escrow at all as a buyer! A difficult feat these days, but certainly not impossible.

Don't forget to be awesome,

Seth T. J. Miller | My Real Estate Pro
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July 02
 

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