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should i purchase a home at the appraised value?

I am buying my grandmother in laws home from my mother in law. She wants to sell the home at the appraisd value. Is this a good way for me to purchase the home at a fair price or do homes typically sell for a percentage less than the appraised value? I just dont want to over pay for the home.
  • July 30 2012 - North Decatur
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Answers (7)

It is very common for homes to sell at appraised value.  Now, that being said I am talking about appraised value from an appraiser not from the city tax assessment.  Those can unfortunately be all over the board these days.  If it was an independent appraisal which you or your grandmother had done, then look at the homes which the appraiser used as comps to determine your value.  Are those homes actually similar and close to the subject property?  If you are getting a loan on the property, you will also have to get yet another appraisal done in order to get your loan anyway.  If you end up with two similar appraisals, then I would feel comfortable moving forward.  Even if you did end up paying a little more for the home than you would from a seller you did not know, at least you are keeping the money in the family! 
  • August 19 2012
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This should be a good idea in the North Decatur area depending on deferred maintenance also.  Has the home been kept up nicely or are there repairs and many updates needed?  I helped a friend renovate a home in the North Decatur area off of Scott Blvd.  It was a great location, he may have paid more than some other Decatur areas, but the home was in original 1950's condition. It was livable, but everything was old. Renovations were still multi-thousands!  You really have to factor those items in somehow because many appraisers don't give that much weight to adjusting the price for out of date items compared to the true cost of replacement. When you are in a great area, people usually overlook repairs due to location and can pay higher, therefor appraisals will be higher too.  
  • July 31 2012
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Profile picture for hpvanc
See if your MIL will accept your lenders appraisal.  It should be a decent indicator of value, then get an attorney involved to do the paperwork.  You could try to find an agent to process the paperwork for you for a flat fee, but I would shy away from allowing them to suggest a contract price with a CMA going into the appraisal, they have a strong bias to the high side on CMA's, and that suggest may result in a higher appraisal than the appraiser would otherwise come up with. 

You may also be able to have an attorney draw up the paperwork, for the transaction for a similar fee to what an agent would charge, and for a lot less than the percentage commission many agents will try to stick to.  Personally I would skip the agent and pay for an attorney, and appraisal.  If you or your MIL would prefer to get a pre-loan appraisal, as a check and balance, you will still most likely save money on the transaction cost versus getting an agent involved.  Get the inspection after you have established the price by appraisal, and negotiate the repairs accordingly.
  • July 30 2012
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#1. Get comps for where the home is located..
#2. If you have a FHA loan, the lender will not allow you to over pay for a home at all.. Lenders get an apprisal giving them all the details if it's priced
 fairly.. If the price she is selling it for is too high, the lender will not give you the loan based on what she wants.. It's based on the apprisal price.. I would
never have my clients pay out of pocket either..
#3. Good Luck,  I would be using a realtor for this transaction keeps it nice and clean, making sure all documents where done..
Don't forget to get a home inspection, keeps you aware of what might be wrong with the home.. make you aware of potential repairs too.. worn out plumbing, electrical etc..
  • July 30 2012
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If the property was appraised "to know what it might be worth" then the appraised value is likely a good indicator of market value. You can be more confident with a second appraisal - there are often small variances between appraisers.

If you pay at or below appraised value, typically you won't be overpaying for the home.
  • July 30 2012
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In todays market if you are buying a property based on appraised value you are getting a good deal.  In fact, in some price ranges homes are selling for above the appraised value.  Keep in mind most lenders will not allow you to finance a home for more than appraised vlaue. Any amount above the appraised value, you would need to pay out of pocket. 

If you have a specific question about a specific situation speak to your Real Estate Agent they can tell you based on Market Comparables if you are getting a good buy.

  • July 30 2012
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Profile picture for Ofe Polack
You may be confusing the assessed value given by the city to a property with the appraised value which is based on comparable sales and active properties on the market.  The best way to go about it is to ask a listing agent to do a CMA, comparative market analysis of the property.  And also to ask a an appraiser to do an appraisal, the later one will cost you but the CMA is usually complimentary.  I would also have a home inspection done, to ensure that there are no major issues with the property.  Then you will be ready to make an offer.
  • July 30 2012
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