How to best determine a house value

May 8, 2021 13 Comments

I was checking Zillow tax history of a house and it looks quite under the value for which it has been listed. I also keep reading here in Blind about stories of appraisals coming up with substantially different numbers.

My main fear in layman terms is buying. ahouse and realizing 2 months later that its value is 100k below the price I paid for it. Any recommendations from seasoned folks on what to do to avoid that?

House location: East Bay

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TOP 13 Comments
  • Amazon
    Jassy Andy

    Go to company page Amazon

    Jassy Andy
    A house is worth whatever someone is willing to pay for it. Appraisals are meaningless, just pay cash to ensure you get the house.
    May 8, 2021 2
    • This right here, not to mention the fact that the value of the house “2 months later” is essentially meaningless unless you plan to refinance or sell within that amount of time which probably isn’t advisable. If you want to buy something decent right now you probably just need to hold your nose and pay up regardless of value, because I guarantee someone else is right behind you and they don’t give a rats ass about 100k difference.
      May 8, 2021
    • Amazon
      Jassy Andy

      Go to company page Amazon

      Jassy Andy
      Exactly. This guys gets it. 👌🏼👌🏼👏🏼👏🏼👆🏼👆🏼
      May 8, 2021
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  • Affirm
    not_max

    Go to company page Affirm

    not_max
    You can’t get a mortgage for more than the appraised value of the house. So you can either keep an appraisal contingency which protects you (but you will be at a disadvantage buying in the bay). Or risk with no appraisal, or make up the difference cash. While you could lose your 3% emd for backing out sans contingency but almost no one in the bay does that cause they got 20+ offers that they can move down the list on.
    May 8, 2021 2
  • Stay in the house long enough for +/-10% not to matter
    May 8, 2021 2
  • In a hot market, you’re best bet is to look at the price of comparable homes sale prices at different times (30 days to 3 months) and try to extrapolate a rate of increase. Use the most recent comparable sale price times the rate of increase to get an estimated sale price.

    Since the rate of price increase is likely high, appraisal values will lag since they are based on recently sold comparables. There is a chance that, if you buy, you’ll pay more than the appraised value (which you’ll have to cover if you need a mortgage). However, since prices are increasing, comparable homes sold after yours will appraise higher which will make your home more valuable.

    So, like another comment said, if you stay in the house long enough (which isn’t long in a hot market), you’ll close any value gaps.
    May 8, 2021 0