There is a transaction involving a house in Antioch that was listed for $249,000. There were multiple offers for the house, and all of them were over $220,000. In light of the fact that numerous, arms-length, knowledgeable buyers were willing to pay over $220,000, the “market value” is clearly over $220,000.
The problem is that there is not a single comparable sale anywhere near the property above $200,000, so there is no way the appraiser (who well understands the definition of “market value”) can appraise the house for more than $200,000.
This issue surfaces frequently, as we have a very similar situation in Alamo right now for a $970,000 PUD. It is very important that both buyers and sellers recognize this issue; both sides need to be prepared to compromise unless the offer is “all cash”.
Note that in the Alamo case, the loan is only $720,000, so the appraisal can come in $70,000 LOW with no effect on financing. Because of this, we went out of our way to explain the difference between “market” value and “appraised” value so our buyer will not be alarmed when the appraisal comes in low.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167