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#465446 - 07/16/19 02:31 PM Comps for neighborhood are way off compared to zip code or even 2 miles away
lookin4help Offline
Junior Member

Registered: 07/16/19
Posts: 1
Loc: New Mexico
Hello,

I have put my old house up for sale and I have received a half dozen offers in just a couple days. All the offers are contingent on appraisal value and my realtor highly doubts any of them will pay the gap between appraisal and our selling price even though they people offering are getting much more house than other options in the area.

Our neighborhood seems very odd, all fairly new houses under 10 years, with a lot of upgrades on average, quite large at around 2,700 square feet. Very nice clean neighborhood.

The problem is these houses have sold for 30% less per square foot than any houses outside of the neighborhood in the recent past.. Even the neighborhood behind my backyard wall which is in somewhat disrepair comparatively, has the same price at 2,100 square feet than our house at 2,700.

Our realtor feels that the appraisal will most likely be based on previous sales in our neighborhood. (there are no houses of our size on the market right now in our neighborhood) I believe there were some investors in our neighborhood who bought quickly when the housing market was depressed and then sold quickly when it went up some which lowered our small neighborhood price average.

We have agreed to a contract which will probably come in 15-20% higher than the appraisal, the purchaser as well as us our hoping the appraisal will come in close to the offered price but they will most likely not fork in the difference between what the bank is willing to loan. My Realtor says physiologically as well most people do not want to pay a lot more than a banks appraisal even if they were to get twice the house compared to one down the street at the same price. They will most likely take a house a third of the size that is not as nice just to be in the bank range..

Why are comps so limited to such a small sample size and is there anything you can do about it? I'm thinking not..

The only thing I can think to do is rent the house until the neighborhood becomes closer to market value.. but it seems like a viscous cycle to me.. if someones wants to buy a house they will most likely stay with a bank appraisal range which means it will never go up compared to the surrounding area because they will continue to be purchased in that price range..

It's pretty depressing..Am I missing something here?

Thank you for your help!

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#465457 - 07/17/19 12:26 PM Re: Comps for neighborhood are way off compared to zip code or even 2 miles away [Re: lookin4help]
Bigtoe Offline
Major Contributor

Registered: 10/14/07
Posts: 2397
Loc: Outer Banks
The way you are comparing the house behind yours makes me think you are looking at tax values because there is no way for you to know what it appraised for. Tax values do not determine a homes value! Ignore them.

What you can do is sell to a buyer who has enough cash to cover the difference between the contract price and the value the bank appraiser puts on it. Remove the appraisal contingency from the contract and make the prospective buyer show you "proof of funds" to cover the difference so you know they can buy it. This has to be done before you sign the contract.

Or, sell to a cash buyer.
_________________________
Your Outer Banks real estate agent. Helping people buy and sell OBX real estate since 1989.

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