Why Paying Over Appraised Value Isn't Bad

54 года назад

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Hey guys, Mortgage Smith here. I want to talk today about paying over appraised value on properties, it's not a bad thing for you buyers out there. If you actually want to buy a home, okay. Because you're having to do this, and you got to put aside what's right or wrong and discover that this is a financial decision and investment in you and your house.

Even when I bought my home eight years ago, I paid $6,000 over appraised value, and I work in the industry guys. I was doing my own loan for free. Now, for you buyers out there, and I want you agents to share this, I want to run a scenario by you.

Let's say you're buying a house for $280,000. Well recent stats in Arizona, we have appreciated between 7% and 11% depending on the area in property value in the last year. So let's just use 10% because I'm pretty confident with where we're at with interest rates right now, that 10% is maybe below what your house is gonna appreciate over the next year.

So, if you buy a house for $280,000, that means if you wait, or if you buy, whatever in a year from now, it's going to be worth 10% more, that's $28,000. So I've heard from a lot of buyers saying, oh well, I want to wait until there's more inventory in the market because I don't want to pay over appraised value. Bad idea.

Okay, you end up paying for one way or another. If you wait six months, a home in that price range will cost you about $14,000 more in purchase price. And let's say it actually does appraise in six months, which I think we're still going to be in the same issue of not having enough inventory and you're still gonna have issues with appraisals, but let's just say it does. That other $14,000 you're paying in purchase price, you're financing the majority of that over 30 years now.

Let's go back to that scenario, where $280,000 purchase. Let's say it appraises for 270, and the seller was like No, we're not gonna drop it, and you have to come up with $10,000 more. Well, pretty simple math - waiting six months is $14,000 more in purchase price or buy now is $10,000, you have to come up with out a pocket.

Not to mention, that is going towards your purchase principal on the house it's not going to interest. You're not financing over 30 years, and you're getting a home. I can tell you right now I'm sitting on a ton of equity because I bought my house eight years ago - so I don't even care about that $6,000 I came up with out of my own pocket. You buyers just have to realize this is what's happening in this market.

Right, wrong whatever it is, principle has never made anybody a good investment. It's not about principle when you're buying a house it's not about emotions, it's about making the right financial decisions for you and your family. And yes, let me take back one thing, it is about emotion because if you love the home -and that is your home you want to be in - that little bit of money after the memories you build over the next 5 to 10 years, doesn't mean squat.

So, that's where we're at in the market. So, think about it. Really, mull this over, but it's a good decision, guys.

Jason Smith - The Mortgage Smith
VP/Branch Manager Producing | Residential Mortgage Loan Originator | NOVA® Home Loans
NMLS# 210839

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