We made an offer on a home and we’re through the inspection / attorney review and the appraisal comes back at the EXACT amount we offered. Now, I’m the buyer here, so right or wrong, I feel like we overpaid to win the bid. Why does this happen? How on earth does it appraise to the exact amount?
In: 16
That’s gotta be a fluke of luck. Appraisers aren’t trying to hit a number other being reasonable, they are a 3rd party, they have already gotten paid, they don’t care if your deal goes through or not.
What they do is combine to pieces of knowledge, they have a data base of things like how much a bedroom is worth, or a bathroom, or a pool, etc. Then they look at recent sales in your area called “comps”, or comparison homes. So your home is going to get a worth first off based on the market in your area, if all the home values go up, so does yours. Then they chose 3-5 close comps and then add or deduct from them to get your home’s layout. If you have an extra bedroom than the comp, add $X, if you have 1 fewer bathrooms, deduct $Y.
Those 3-5 comps are now “your home”, take the average of the 3-5 and that’s your appraisal more or less.
I personally have had a home under-appraise and we had to negotiate a cut with the seller to match the appraisal. More recently I over-appraised and it as a-ok.
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