After doing some research we've found that we could save significantly on our monthly payments AND our interest payments if we refinanced to a 15 year mortgage and rolled in payoff of one car and our home equity line of credit. We live in a very affordable area, so both what we pay and what we would pay are well within our means. Only catch is our house has to appraise for at least 15% more than the $295k we purchased it for just under 2 years ago.
In theory that should be completely possible. The house was purchased as a foreclosure. We had some strong competition even then with the house in slightly distressed condition. Even after we went under contract there were higher offers coming in, and it's only our luck that the bank didn't choose to entertain one of those while we were working through the closing process. Also since purchase we have put nearly 100k into the house in new roofing, restored roofing, masonry repairs, heating and cooling repairs, elect5rical upgrades, appliances, repairing interior water damage, and replacing items that were stripped out of the house before purchase.
The challenge: nothing has sold for more than 305k in our area in the last year, 310k in the last 2 years, and 365k if we go back 4 years. We live in a historic neighborhood (not a locally designated Historic District) where houses range in size from 1000 sf bungalows to 5000 sf manor houses and lot sizes from 4000 sf narrow city lots to 2 acre parcels, and everything in between, and sometimes all in the same block.
The smaller houses have more frequent sales and have been doing very well in recent years. Some have also been subject to flips. Our last house in the same neighborhood sold for 260k two years after we purchased it for 210k with fairly minimal investment on our part (paint, carpet, etc). The larger houses, more architectural significant houses, or houses on larger lots on the other hand hardly ever go on the market. Most of them have been in the same hands since at least the recession, many since the 1990s, and even a few have been in the same family since the 1960s or 40s. A handful have sold as foreclosures in recent years. All sold fast and for prices higher than asking price.
So we basically have a house with no real recent comps. When we purchased in 2018 the appraisal noted that there were no comps also, but we sold within range of where other top properties were selling for. Instead we have the closest comparables:
1. Two houses, both 1000 sf larger and with 2 additional bedrooms than ours located only 4 blocks away and across the street from each other. Both sold almost a year ago for $265k, or a paltry $60 per square foot for various reasons including dark maze like basements, kitchens and baths that hadn't been touched in decades, a small lot in one case, and a backyard that was one giant chain link surrounded concrete pad in the other. They are also separated from our house by a major street and in an area where houses have always sold for discounted rates over our side.
2. A house in the next block that is similar is style, design, and layout, that sold for $305k last week. In the listing it would seem to be larger than our house and with 2 more bedrooms, and even with a finished basement. But we know from having toured it and compared it with the tax diagrams that its actually 20% smaller, the 5th bedroom is actually the master bedroom sitting room, the en-suite bath is connected to one of the smaller bedrooms, and the finished basement claims are pretty dubious. Taking that all into account it's actually in line with where our house might work out, but there's no higher sale to compare against.
Our appraisal visit was today. The appraiser initially thought we were looking to sell our home, as was concerned that there was no way for us to get an attractive price with the recent sales. Knowing our purpose though he thought he would be able to cast a wider net and find some properties that help ours in the neighboring communities. It will be interesting to see what he comes back with in the report.
But it also has me wondering what sort of situation we would ever be if we were to sell. We aren't looking to leave in the near future, and it seems like the market is definitely there for a good price, but unless we have a cash offer it looks like the appraisal could always be a major wild card.
Has anyone else dealt with unique sales and challenging appraisals?
homechef59
A FoxOriginal Author
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