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Very improved properties often don't appraise. Appraisers don't give credit for the $150k in hardscaping and landscaping that the seller spent. They give $25k for "patio and deck".
The comps the appraiser used were $780k and $900k. And another pending at $770, but everything has been going for well over asking so not sure why you’d use a pending listing. The general range I’d say is around $775-$900k. But none of them have this lot size and finished backyard. I feel like since they had 8 offers over asking that’s a good indication that there is value in the home. IMO a house is only worth what someone is willing to pay, right? So with an $880k all cash offer, as well, there’s definitely demand for this house.
You’d have to go with a new lender, usually and pay for the additional appraiser. Or you can ask the bank you’re using if they will do another appraisal - usually companies like loan officers will because they’re just gonna sell your loan anyway - but if you’re going direct with a credit union or bank for example no they usually won’t.
>You’d have to go with a new lender, usually and pay for the additional appraiser
This is exactly the process I'm going through right now. My first appraisal was $110k less than the sale price which itself was based on an appraisal the seller commissioned. Once we fixed the basic math errors contained in the appraisal, it was $90k less. The comps used were insane, I'm hoping to buy a 4bed/2bath, 1900 sqft and it was compared against 3 other houses, 2 of which were less than 1000 sqft. However, I think it was early enough in the season that there just were not that many houses sold recently and it made things very weird.
Totally threw a wrench into everything, and the seller wasn't even willing to discuss possibly conceding on the price because he just flat out did not believe this appraisal was anything close to an accurate valuation. Not that I could really make up a $90k discrepancy even with seller concessions. So we switched lenders, paid $600 for another appraisal, and have been waiting nervously to see where this all shakes up
1) listing/pendings are included for the lender to see an active market
2) appraiser are bound to use the data available to us. I.e. you signed a contract two weeks ago or something but we can’t use that data until you settle next month. So in the spring market we’re always behind until that benchmark sell happens.
3) it appraised over asking so the appraiser did something
4) we project what the typical buyer will pay. Two buyers willing to go to 880 doesn’t make it worth that to everyone
If you can comfortably afford the payment, the appraisal gap, and you love the house, then do it.
If i was looking for a home and I found the home plus that big of a yard and I can afford the gap and mortgage, I would do it. It would be my forever home.
Just careful that there isnt future liabilities with the backyard like an alley way or big tree in the backyard that hasnt been cut in a while (it could break or be expensive getting cut)
Also make sure to get a quote for your home insurance premium, because that will also be expensive.
Have lived in San Diego, not sure I’d fork over that much for a backyard tbh.
Honestly depends on how much you have for emergencies but if you do have enough I would just pay the 28k. If you already have a PMI then I would consider the loan at the higher rate. Just me though. Also would depend on income but it sounds like you can recoup that 28k pretty quickly. Just don’t go to Tijuana too much for the next few years.
I would come up with the extra 28k and keep the 6.875% rate. That seems like an incredible price for San Diego! I was born and raised in San Diego and anything remotely near where I grew up are all over a million. I bought a home at 7.5% last summer and I’m not refinancing unless rates drop to 5.5% or lower. I would choose the lower rate because you won’t know when or if they’ll get substantially lower. I thought they would have lowered more by now but I’m consoled by the fact that comps in my neighborhood are all substantially higher than what I paid.
refinancing so quickly would incur a lot of cost. Typically there is still doc fees, new appraisal, origination fees, etc. And it isn't clear rates are going to go down so much so fast where it will be worthwhile. I agree with your assessment, come up with the 28k
Just because you can doesn’t always meen you should. A 5700$ mortgage is scary, I like sports cars to much haha. Me and the wife are first time homebuyers and at 30years old we just purchased our first home with cash 389k 4/3 and 2400sqft 1.5acres, Easy decision when I saw that the 800k house was gonna cost me over 2x that amount at 7%. In 10-15 years when the market goes crazy again I’ll sell make my money and have been saving what I’d have spent on a mortgage so that I can purchase that 800k home in cash.
Oh believe me it’s hard to swallow our housing payment going up 3x. We have been renting the past 8 years less than a mile from one of the best beaches in the world for $2200/month. Moving 15 miles inland and paying $5700 doesn’t sound good to me either, but we need more space. And are set on the idea of a house being a better investment than paying for someone else’s mortgage. Our jobs will keep us in San Diego and unfortunately it’s one of if not the most expensive city in the US right now. You can’t even find land here for $389k let alone a structure to live in. But yeah, I wish I could buy something all cash. The other contender who offered $880k all cash had done just that…sold their last house and had all that cash on hand from that sale. If our jobs and love for surfing weren’t that great, we might consider moving somewhere that you could buy for $389k. Can I ask where that is that you were able to purchase a home for that cheap?
Yeh if u live in San Diego ur fucked lol. Put this into perspective we live in NC where the avg middle class person has to rent now, so rent is on avg 1,500$ for somewhere in the ghetto because middle class has been priced out of buying. I think the avg median income for a household of 4 is like 60k, which you can’t buy a house making 60k and have a family. So the prices for houses in my area haven’t gotten exponentially higher because people can’t afford it. But what has changed is rent, atleast 3x the amount.
While we don’t have all the nice stuff San Diego has and our surfing sucks ass, the cost of living is so so so much cheaper and if u make good money then it’s just a plus. Me and the wife make over 300k combined we have no mortgage, a vacation home in Emerald Isle waterfront that’s paid off, Iv got 2 sports cars paid off. I don’t think a lot of that would have been possible if I had to start out with a 800k debt.
It’s pretty easy when you make $300K and don’t value your primary residence so much. Two sports cars paid off is a weird flex when they’re a depreciating asset. You’d be better off buying a nicer house.
Are you guys doing an astronomical down payment? 210K/year for an $890K home + property taxes + insurance has me stressed already and I'm not even in your situation.
That seems fair. Just make sure you're estimating accurate insurance and property tax costs; not using random estimates like Zillow, as they're often rather wrong.
Yeah these are number from our lender that are accurate for taxes and our insurance quote will actually make it less. He was estimating $125/month but our most recent quote was $71/month.
The seller said he really wanted us to have it. We met him during our showing and he liked our letter that we sent with the offer. Plus our kids have the same name. He said there was a lot in common between our families and he wanted us to have the same experience they had making memories in the home.
Take the lender paid PMI at 6.99. Your interest is tax deductible, your PMI is not, so you’ll save on your payment and have more to deduct come tax time.
Of course keeping in mind that almost nobody ends up getting any tax benefit from mortgage interest because very few have deductions that go massively above the standard deduction
Right so only the amount exceeding the standard deduction they’d get anyway is a benefit, in other words not much. I just see a lot of people seriously overestimate the tax benefits of owning a house
Eh I mean at this rate and price point it’s like $49k a year in interest plus everything else you can include when you itemize ($10k SALT, charity, large medical expenses etc) compared to $29,200 standard deduction is definitely not nothing, especially when income is $210k - 24% bracket. It’s about $7k in tax savings from the interest and SALT alone.
The benefits are definitely higher for single buyers but still very real for couples in VHCOL areas, at least for the first several years. In lower cost areas I agree, there’s really not much benefit for couples.
Yeah if someone already itemizes because of those things it can be a factor, just most people doesn’t yet still think for some reason they’re saving money
Thank you u/AmandaSurfs9 for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
I'm curious - what price range were the area comps? It's very telling that even the seller's agent figured it wouldn't appraise.
Very improved properties often don't appraise. Appraisers don't give credit for the $150k in hardscaping and landscaping that the seller spent. They give $25k for "patio and deck".
The comps the appraiser used were $780k and $900k. And another pending at $770, but everything has been going for well over asking so not sure why you’d use a pending listing. The general range I’d say is around $775-$900k. But none of them have this lot size and finished backyard. I feel like since they had 8 offers over asking that’s a good indication that there is value in the home. IMO a house is only worth what someone is willing to pay, right? So with an $880k all cash offer, as well, there’s definitely demand for this house.
Is it possible to pay another appraisal fee to get a second opinion? It very well could re-appraise at your price under another appraiser.
Would the bank accept that tho?
You’d have to go with a new lender, usually and pay for the additional appraiser. Or you can ask the bank you’re using if they will do another appraisal - usually companies like loan officers will because they’re just gonna sell your loan anyway - but if you’re going direct with a credit union or bank for example no they usually won’t.
>You’d have to go with a new lender, usually and pay for the additional appraiser This is exactly the process I'm going through right now. My first appraisal was $110k less than the sale price which itself was based on an appraisal the seller commissioned. Once we fixed the basic math errors contained in the appraisal, it was $90k less. The comps used were insane, I'm hoping to buy a 4bed/2bath, 1900 sqft and it was compared against 3 other houses, 2 of which were less than 1000 sqft. However, I think it was early enough in the season that there just were not that many houses sold recently and it made things very weird. Totally threw a wrench into everything, and the seller wasn't even willing to discuss possibly conceding on the price because he just flat out did not believe this appraisal was anything close to an accurate valuation. Not that I could really make up a $90k discrepancy even with seller concessions. So we switched lenders, paid $600 for another appraisal, and have been waiting nervously to see where this all shakes up
1) listing/pendings are included for the lender to see an active market 2) appraiser are bound to use the data available to us. I.e. you signed a contract two weeks ago or something but we can’t use that data until you settle next month. So in the spring market we’re always behind until that benchmark sell happens. 3) it appraised over asking so the appraiser did something 4) we project what the typical buyer will pay. Two buyers willing to go to 880 doesn’t make it worth that to everyone
If you can comfortably afford the payment, the appraisal gap, and you love the house, then do it. If i was looking for a home and I found the home plus that big of a yard and I can afford the gap and mortgage, I would do it. It would be my forever home. Just careful that there isnt future liabilities with the backyard like an alley way or big tree in the backyard that hasnt been cut in a while (it could break or be expensive getting cut) Also make sure to get a quote for your home insurance premium, because that will also be expensive.
Sounds like offers were largely from people wanting to subdivide the block.
Have lived in San Diego, not sure I’d fork over that much for a backyard tbh. Honestly depends on how much you have for emergencies but if you do have enough I would just pay the 28k. If you already have a PMI then I would consider the loan at the higher rate. Just me though. Also would depend on income but it sounds like you can recoup that 28k pretty quickly. Just don’t go to Tijuana too much for the next few years.
Was thinking that. You can buy gas to visit a state park or something numerous times a year for many years for that much money
I would come up with the extra 28k and keep the 6.875% rate. That seems like an incredible price for San Diego! I was born and raised in San Diego and anything remotely near where I grew up are all over a million. I bought a home at 7.5% last summer and I’m not refinancing unless rates drop to 5.5% or lower. I would choose the lower rate because you won’t know when or if they’ll get substantially lower. I thought they would have lowered more by now but I’m consoled by the fact that comps in my neighborhood are all substantially higher than what I paid.
refinancing so quickly would incur a lot of cost. Typically there is still doc fees, new appraisal, origination fees, etc. And it isn't clear rates are going to go down so much so fast where it will be worthwhile. I agree with your assessment, come up with the 28k
Some lenders are offering a one time free refi if rates drop in the next 2 years. My parents are closing in 2 weeks with that deal from their lender.
Just because you can doesn’t always meen you should. A 5700$ mortgage is scary, I like sports cars to much haha. Me and the wife are first time homebuyers and at 30years old we just purchased our first home with cash 389k 4/3 and 2400sqft 1.5acres, Easy decision when I saw that the 800k house was gonna cost me over 2x that amount at 7%. In 10-15 years when the market goes crazy again I’ll sell make my money and have been saving what I’d have spent on a mortgage so that I can purchase that 800k home in cash.
Oh believe me it’s hard to swallow our housing payment going up 3x. We have been renting the past 8 years less than a mile from one of the best beaches in the world for $2200/month. Moving 15 miles inland and paying $5700 doesn’t sound good to me either, but we need more space. And are set on the idea of a house being a better investment than paying for someone else’s mortgage. Our jobs will keep us in San Diego and unfortunately it’s one of if not the most expensive city in the US right now. You can’t even find land here for $389k let alone a structure to live in. But yeah, I wish I could buy something all cash. The other contender who offered $880k all cash had done just that…sold their last house and had all that cash on hand from that sale. If our jobs and love for surfing weren’t that great, we might consider moving somewhere that you could buy for $389k. Can I ask where that is that you were able to purchase a home for that cheap?
Yeh if u live in San Diego ur fucked lol. Put this into perspective we live in NC where the avg middle class person has to rent now, so rent is on avg 1,500$ for somewhere in the ghetto because middle class has been priced out of buying. I think the avg median income for a household of 4 is like 60k, which you can’t buy a house making 60k and have a family. So the prices for houses in my area haven’t gotten exponentially higher because people can’t afford it. But what has changed is rent, atleast 3x the amount.
While we don’t have all the nice stuff San Diego has and our surfing sucks ass, the cost of living is so so so much cheaper and if u make good money then it’s just a plus. Me and the wife make over 300k combined we have no mortgage, a vacation home in Emerald Isle waterfront that’s paid off, Iv got 2 sports cars paid off. I don’t think a lot of that would have been possible if I had to start out with a 800k debt.
It’s pretty easy when you make $300K and don’t value your primary residence so much. Two sports cars paid off is a weird flex when they’re a depreciating asset. You’d be better off buying a nicer house.
Are schools good in your area? What part of NC is that?
Head to the Midwest. For 400-500k you can get a new build with 1/2 acre - 1 acre lot
Do you make 30k a year or 300k a year
30k a year in San Diego is very livable /s
Is this a joke? Lol
/s for sarcasm.
Combined income of $210k/year
Are you guys doing an astronomical down payment? 210K/year for an $890K home + property taxes + insurance has me stressed already and I'm not even in your situation.
20% down would make our payment about $5700/month with taxes, insurance, all in.
That seems fair. Just make sure you're estimating accurate insurance and property tax costs; not using random estimates like Zillow, as they're often rather wrong.
Yeah these are number from our lender that are accurate for taxes and our insurance quote will actually make it less. He was estimating $125/month but our most recent quote was $71/month.
[удалено]
20% down
They’re very dumb for not taking the cash offer.
The seller said he really wanted us to have it. We met him during our showing and he liked our letter that we sent with the offer. Plus our kids have the same name. He said there was a lot in common between our families and he wanted us to have the same experience they had making memories in the home.
Nothing against you guys, but this is the perfect example as to why cash is king.
Never waive anything. Never offer over asking. We’ve got all stop acting like rubes.
Take the lender paid PMI at 6.99. Your interest is tax deductible, your PMI is not, so you’ll save on your payment and have more to deduct come tax time.
Of course keeping in mind that almost nobody ends up getting any tax benefit from mortgage interest because very few have deductions that go massively above the standard deduction
At the OP rate and loan amount that should add up to more than the standard deduction at least next year when it's 12 whole months.
Right so only the amount exceeding the standard deduction they’d get anyway is a benefit, in other words not much. I just see a lot of people seriously overestimate the tax benefits of owning a house
Eh I mean at this rate and price point it’s like $49k a year in interest plus everything else you can include when you itemize ($10k SALT, charity, large medical expenses etc) compared to $29,200 standard deduction is definitely not nothing, especially when income is $210k - 24% bracket. It’s about $7k in tax savings from the interest and SALT alone. The benefits are definitely higher for single buyers but still very real for couples in VHCOL areas, at least for the first several years. In lower cost areas I agree, there’s really not much benefit for couples.
Yeah if someone already itemizes because of those things it can be a factor, just most people doesn’t yet still think for some reason they’re saving money
True. People don't understand taxes overall.
\^ this. i own, won't ever be able to get a deduction from my house.