Our REA once compared the town assessment of sold homes to their selling price and came up with the fact that most homes in our town sold for X% above their assessed value. The numbers were very consistent across the board for some reason. You could look at that across the whole town, see if the result is consistent for your town, then work with the resulting number.

I don't know about the appraisal condition. What if the appraisal came in higher? Wouldn't they want more (if you are entitled to less if it comes in lower)?

You can write in anything you want as long as it isn't illegal to do so. Appraisal contingencies are commonplace. If the property doesn't appraise at least as high as the sales place, the buyer may opt out. Normally you don't have to supply the sellers with a copy of the appraisal unless you invoke the contingency, so they won't actually know what the property appraised for, unless it comes in too low.

Appraisers can locate comps elsewhere, if they have to. We just had an appraisal done on some acreage. The comps were from all over the county, since nothing similar had recently sold locally. This was done under the new, stringent rules. The appraiser just has to work a little to find the comps.

If you really have no clue, you could always hire an appraiser on your own. You'll end up paying twice for it because the bank likely won't accept your version for the loan. It is better to pay a couple hundred bucks up front than to try to negotiate a price without any solid information.

You don't say if you will be borrowing money to buy this property, if you are your lender will require an appraisal and those guys will have their own system of comparing sold properties. I'm in the process of purchasing a house that doesn't really match anything around it and the appraisal only featured 5 properties, one of which was "my" house with my offer, only one other place was what I considered comparable. They had mathematical formulas that were applied to the square footage of the house and then to the size of the lot. It had nothing to do with what else was for sale in the neighborhood or nearby, it was only concerned with recently sold properties. The appraisal came back much lower than what anyone thought it would be - so don't be surprised if the house you're looking at is worth a lot less than they're asking. I will also add that in my case the bank's appraisal was closer to what the average of all the online "whats my house worth" type of free appraisal sites listed. So you might want to run those numbers, but I wouldn't consider them perfect.

thanks for the ideas! i'll definitely check the ratio of overall sales to appraised value.

so if i made them an offer, and suspected that is was possible that the appraisal would come back wackily low -
anybody have any creative ideas on what sort of contigencies we could put in the contract as a safeguard? I'm not angling to beat the price down so much as I'd just like to figure out a fair value for the home and be able to sell the house in about 8 years or so.

We are using a bank, and an appraiser for the bank. I wonder if we could get the banks appraiser to come appraise the house before we made an offer - i was thinking though that appraisers usually know the selling price before they come appraise and then use his appraisal if we purchase so we wouldn't have to pay for it twice.

erk, i meant check the ratio of overall sales to assessed value.

My last offer came from the buyer with a bank pre-approval letter and the bank's appraisal on my property.
So apparently that's not unusual.

You have the right idea about making your own comps, but you do need to expand the area that you're using so that it includes recently sold properties. Be sure to check the $ per sq foot. You just add or subtract amounts based on the differences. For example, river front might be a $30K reduction to comp a non-riverfront home. View, maybe $10K. Extra room, $8K. Finished basement, $3K. These are just examples; the amounts will vary by area and what buyers want.

To come up with a fair price for my very unique house under contract, I used the average $/sqft in the area times my actual sqft, then added a few thousand for the basement, a few more for the view, a few more for it being end-unit townhouse, valuable features unique as compared to those other listings/expireds/solds/etc.

Hope this helps.

What I meant to say - about the appraisal that I had done on the property I am buying - it that square footage of the lot and the house were ALL the appraiser seemed to look at. The quality of the construction, the state of repair, the amount of non-permit homeowner remodeling done on the place meant nothing. It was not part of the equation at all, only the square footage. The appraisal was long and complex but it seemed to me that they used two types of mathematical equations, one for brand new homes and one for older homes.

My understanding is that home appraisals are handled differently in different parts of the country so your banks appraiser may figure some of the plusses and minuses into the value of this house.

The realtor selling the house had done her own rough math using what she considered comps. Her numbers did not match what the banks appraiser came up with (a big surprise to her, not so much to me). That is why I say to check out any of the online services like Zillow and anything you come up with when you google "what's my house worth?". Though no one thinks these places offer valid numbers, I will say that the banks appraisal came in closer to Zillow than I would have thought.

I'm trying to say that the whole process is very cut and dry, not a lot of wiggling to come up with a number.

"The quality of the construction, the state of repair, the amount of non-permit homeowner remodeling done on the place meant nothing. It was not part of the equation at all, only the square footage."

There are places to note adjustments for these things on the appraisal form, but most of them have no real value as far as the lender is concerned as long as they are 'adequate.'

As stated above appraisals are coming in close to Zillow and not cyberhomes. I would find out how much paper is on the house, average listing price per square foot in the area, and go from there.

FYI-
The appraisal that came in for our property was for the buyer to make an offer and we wrote a contract for that amount. The bank's appraisal just came in $10K less, 4 days before closing, so we're in crisis.
Zillow is $45K higher than the bank's appraisal.
Just for thought.

My bad, I meant to say assessment close to Zillow, or where Zillow obtains its info. We're buying a beautiful 4/3/3 home in SW FL and am trying to get the lender to leave the appraiser without a purchase price, should be fun!

Update: The underwriter is trying to get the appraiser to drop the value another $5K, putting it $15K below the sales price. Ugh!
The loan officer is pleading the case. The comps used for the appraisal were terrible. Not that there are any better ones, though. Nothing remotely close has sold.