Relocation appraisal vs. buyer's appraisal?

[peaceofmind]

Hi, we are currently trying to sell our house. We are doing a relocation and already had the relo appraisals. They are VERY, VERY low. Fortunately, we suddenly find ourselves with multiple offers. They are significantly above the relocation appraisal numbers.

What I am scared of now is that whatever the sale price ends up being, is that the lender appraisals will be too low and the sale won't go through (my worry being based on how low the relo appraisals came back).

Is it typical that a lender appraisal would be as low as a relocation appraisal?

Thanks in advance if anyone can help me out here.

 

[NORTON]

Hi, we are currently trying to sell our house. We are doing a relocation and already had the relo appraisals. They are VERY, VERY low. Fortunately, we suddenly find ourselves with multiple offers. They are significantly above the relocation appraisal numbers.

What I am scared of now is that whatever the sale price ends up being, is that the lender appraisals will be too low and the sale won't go through (my worry being based on how low the relo appraisals came back).

Is it typical that a lender appraisal would be as low as a relocation appraisal?

Thanks in advance if anyone can help me out here.

I don't think any of your "typical" situation fears are actually typical. Why do u think your RELO appraisal was low? what in particular do u disagree with? do u have comps to show otherwise? or was it just your general thought that your home was worth more? The lender ordered appraisal should be working in a general similar manner that your first appraisal was concluded as long as the time frames are similar although, that doesn't mean the lender can't reduce the amount they are willing to lend on thus, it's not just an appraiser that u should be concerned about......what bank will be lending on your property, one of the big box lenders? if so, more problems may occur than u realize, good luck.

 

[DMZwerg]

In many areas homes are not selling very quickly on average. A relocation appraisal may have some caveat included about the value being for a quick sale, aka the property selling within a certain number of days, and often the value indicated under such marketing restrictions may well be lower than one with more normal allowances for marketing time. That may be part of the equation.

Another part of the equation may be that the most common type of sales in your area may be REOs (bank owned sales), which typically sell for significantly less than traditional sales.

I know that isn't much help or reassurance but you may want to look carefully at the appraisal you already have and determine if it seems to rely heavily on REO/foreclosure sales. If so it is possible that it was under-valued. When you accept an offer and the buyer gets an appraisal done recommend they get a copy and do the same. If sufficient traditional sales have occurred in your market area then an appraisal that relied heavily on REOs/foreclosures or even short sales may have incorrectly valued your property lower than it should have been.

Hope that helps!

 

[Thomas Fiehler]

The relocation appraisal is asking for the most probable sales price, usually with a 90-120 day marketing period. The "sales" appraisal wants to know what its worth. What part of KY are you in? It's not unusual for me to see properties in nicer areas of Cincinnati selling for what they did 10+ years ago.

 

[Mountain Man]

A relocation appraisal is a completely different creature from a Market Value appraisal a bank uses. In a relocation appraisal, the definition of value is "A Likely Sales Price". Therefore, sales concessions are deducted, required repairs provided in the client's scope of work are deducted, and a forecasting adjustment is applied to reduce the asking price to within a specific marketing time. Most relocation companies require a 90 to 120 day marketing period, so most properties have to be adjusted downward in order to bring about a sale that fast. The relo company wants to know how much will they get at closing, not just the sales price.

In a regular "bank appraisal" the definition of value appraised is "Market Value". Market value is defined as:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

• Buyer and seller are typically motivated;
• Both parties are well informed or well advised, and each acting in what they consider their best interests;
• A reasonable time is allowed for exposure in the open market;
• Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and
• The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

So for example, in my area 95% of sales to list price is typical, as well as 2% to 3% in closing cost. These concessions are not deducted as it is typical in the market. Also 6 months is our typical marketing time, so no deduction for forecasting or market time as long it's typical.

 

[peaceofmind]

Thanks for your responses.

The relocation appraisals are based on a 90 day marketing window. We've been on the market less than 60 days and we have two offers on the table right now that are between $45,000 and $65,000 higher than the relocation appraisal average. That is the first reason I say the relocation appraisals are "low." The other reason I characterize them as "low" is that they are, yes, personally subjectively low to ME, since they are $140,000 lower than we paid for the house plus improvements four years ago. Don't get me wrong - I don't expect to get for our house what we paid 4 years ago - we didn't even list for what we paid for it and on top of that listed it for a $75,000 loss. In my (very humble layperson's) opinion, the fact that we listed it for a $75,000 loss on top of the fact that inside 60 days we had 2 offers well above the relocation appraisals I feel gives me grounds to call the relocation appraisals "low."

So, that was the basis for my question. In this market, are relocation appraisals (this one based on 90 days projected sale price) typically low. I think Mountain Man explained what I was getting at - is it that a relocation appraisal is done differently, under different considerations, that would possibly result in lower appraisals than one would get on a market value appraisal.

Thanks! I feel a little better, although only time will tell based on some of the issues mentioned. I'll be on pins and needles I guess.

 

[peaceofmind]

Thomas, I am indeed in Northern Kentucky, and the market you've mentioned is one of the reasons I am worried. I don't necessarily think the relo appraisers we had are "wrong" in their numbers, just wondering if a bank appraisal could possibly come back in line with the offers we have, or if we should be very worried about them coming back as low as the relo appraisals. There are properties selling in the range we have for our offers, but as you know I am sure, there isn't alot of movement here. The houses that have sold in the range of our offers are similar homes, but not in our neighborhood. In our neighborhood, the only properties that have sold recently are older and smaller than ours - honestly nothing else has sold. There just isn't much for comparison in our specific subdivision.