Am I being ripped off on this house?

[97guns]

you did not get robbed, the current market conditions in your area dicatated that settled upon price.

[jimmyrules712]

Get a 2nd independent appraisal. Nothing wrong with getting a 2nd opinion on a $200k purchase. If the values come back the same, then the home is legitimately worth that much, and $190k is a fair offer on that home in the current market.


Now is that how much you should be spending on a home is another story. Do you make over $65k/year?

If you only make $30-40k/year, you shouldn't get this home even if it is fairly priced.

If you make 80k+/year, then you can afford the home, and if the results of the 2nd appraisal confirm the bank's appraisal, you could move forward confidently since you love the house so much and have confirmed it's a fair offer.

I make 75k and I'm paying 20% down on the house and I have no other debt and I'm doing a 15 yr loan. My fiance makes 35k. I've run the budget numbers shouldn't have problems paying it.

I like the idea of a second appraisal, I might do that. Although to be honest the lowest I could imagine it appraising for is $160k because I know of houses in town that have sold in the 130 to 150k range that are older and not even updated. If the worst happens and the market only values it at 160k or 170k when we try to sell down the road it isn't the end of the world, I'll still be above water on it and we aren't buying it as an investment.

[jimmyrules712]

If the municipality has never updated the value of that house you may face a giant increase in property tax. Did you review all the permits signed off when renovations were completed? This has potential to be a big issue in the future.

If you and GF plan to live there for many years, today's value isn't as worrisome as it might have been. Understand that you are not buying the typical home in that community and therefore it will take longer to find a buyer sometime in the future.

I'm already planning on having to pay about twice as much in property taxes as the current owners, do, so I'm prepared for that. I have not reviewed the permits and I'm not even sure how to get access to those. If they didn't get proper permits what are the repercussions that could affect me?

The owners father did the renovations and he's apparently one of the biggest builders in town, I would think he would have made sure to get permits but who knows.

[frugalgirl]

I'm already planning on having to pay about twice as much in property taxes as the current owners, do, so I'm prepared for that. I have not reviewed the permits and I'm not even sure how to get access to those. If they didn't get proper permits what are the repercussions that could affect me?

The owners father did the renovations and he's apparently one of the biggest builders in town, I would think he would have made sure to get permits but who knows.

I don't know where you live but there should be some local government office that issues building permits. If you go there and give them the address of the house, they should be able to let you know if there are any outstanding permits.

Some places will issue a permit and then require sign off on the work in stages - like electrical and plumbing. If these permits were issued but the inspection phase not completed, you might not be legally allowed to occupy the house. To pass the inspection and get the occupancy permit, you may have to tear down the drywall for the inspector to gain access to see the plumbing or electrical, etc. to do the inspection.

I'd ask your real estate agent these questions. The agency should be able to answer these questions or at least point you to the right place to get the answers.

I think this is probably a non-issue but it never hurts to ask.

[MonkeyMama]

Considering the circumstances, I'd consider hiring an independent appraiser. One who doesn't know what the seller/bank wants it to appraise for.

You can ask your realtor (if you have one), if the price is fair. We had an excellent/ethical realtor, but it's one of those things I'd want a more independent opinion on, myself.

I suppose living in a big city with tons of real estate I didn't really see the point of an appraiser (our own home purchases). If there isn't much to compare, I can see the value in that kind of expertise.

I think property taxes are assessed differently everywhere so not sure how relevant any of that discussion is. HEre, assessed value has absolutely nothing to do with the fair market value.

[jpg7n16]

I make 75k and I'm paying 20% down on the house and I have no other debt and I'm doing a 15 yr loan. My fiance makes 35k. I've run the budget numbers shouldn't have problems paying it.

I like the idea of a second appraisal, I might do that. Although to be honest the lowest I could imagine it appraising for is $160k because I know of houses in town that have sold in the 130 to 150k range that are older and not even updated. If the worst happens and the market only values it at 160k or 170k when we try to sell down the road it isn't the end of the world, I'll still be above water on it and we aren't buying it as an investment.

yeah your income can def afford the place then. no issues there


and my 2nd appraiser comment was because I didn't notice you already purchased the home.

The title of the thread seems as though you're considering purchasing but haven't yet. "Am I being ripped off" = still looking to buy, "was I ripped off?" = already bought.

I did go back and see that you had it listed in your first post that you 'settled at $189k', but I must have just missed it. oops!


Somewhere I heard that you know it was a fair value, if the buyer wanted to pay a little less, and the seller wanted to get a little more. Usually if you're in the middle, the price is pretty fair. Seems like that's where you are at, so my guess (without specific knowledge) is that the $189k deal was a fair price. (you wanted a little less, they wanted a little more)

[MonkeyMama]

@ jpg7n16 - I think he is in escrow - sale is not final.

[jimmyrules712]

yeah your income can def afford the place then. no issues there


and my 2nd appraiser comment was because I didn't notice you already purchased the home.

The title of the thread seems as though you're considering purchasing but haven't yet. "Am I being ripped off" = still looking to buy, "was I ripped off?" = already bought.

I did go back and see that you had it listed in your first post that you 'settled at $189k', but I must have just missed it. oops!


Somewhere I heard that you know it was a fair value, if the buyer wanted to pay a little less, and the seller wanted to get a little more. Usually if you're in the middle, the price is pretty fair. Seems like that's where you are at, so my guess (without specific knowledge) is that the $189k deal was a fair price. (you wanted a little less, they wanted a little more)

I'm under contract but I haven't closed yet.

Your comment about fair value makes a lot of sense and that makes me feel better. I would have been very happy if I had gotten it for $10k less and the seller originally wanted $20k more. Assuming we don't try to move within 3 years it won't matter in the long run if we overpayed by $10k or not.

[zetta]

Like I said it's hard to do a comparison. All the homes in the same neighborhood are half the size and for the most part have not been updated since 1960. This house was practically gutted and renovated. The closest neighborhoods with new houses have the houses going for anywhere from $150,000 to $300,000 with sq footage ranging from 2,000 to 3,000. The only houses I've found that have anywhere close to my sq footage are brand new and thus not an apples to apples comparison. The only homes that are older are not as big and not renovated.

What the sellers paid for the house, and how much they paid for the renovations have little to do with what the house is currently worth. Today it's worth what a buyer (you) is willing to pay for it. Tomorrow it will be worth what the next buyer will pay.

There's a rule of thumb that says don't buy the biggest/most expensive house in the neighborhood. It's harder to sell, and you will get less for that house than you would if it were in a neighborhood of comparable houses. Second opinions from an independent appraiser and an honest real estate agent should be able to give you an idea of where you stand.

Is this your "forever" house that you plan to live in until retirement and beyond? Or is it likely you will be moving within 10 years for a better school district, career opportunities, etc.?

[jimmyrules712]

There's a rule of thumb that says don't buy the biggest/most expensive house in the neighborhood. It's harder to sell, and you will get less for that house than you would if it were in a neighborhood of comparable houses. Second opinions from an independent appraiser and an honest real estate agent should be able to give you an idea of where you stand.

Is this your "forever" house that you plan to live in until retirement and beyond? Or is it likely you will be moving within 10 years for a better school district, career opportunities, etc.?

This is one of the most expensive houses in the neighborhood, and several others have told me the same rule of thumb, but I'm not sure it makes sense to me. Wouldn't the same rule of thumb of thumb be resulting in me getting a better house for the price than if i bought in a more expensive neighborhood?

[cschin4]

They did not make significant renovations and double the sq ft of the house for $25-50K!! LOL!

[WISEWOMAN]

Maybe the anxiety of purchasing your first home is overwhelming you. It's classic to second guess yourself. All you can do is rely on the home inspection, your realtor and the comps and your gut feeling about the house. I do recommend you double check the permits. I purchased my first home with the impression the addition to the garage was permitted. My realtor pulled the permits but when I went to sell, I found the city had pulled the permits for a home down the street with similar address (eg. 3320 instead of 3220) and my addition was not permitted.

Good luck!

[zetta]

This is one of the most expensive houses in the neighborhood, and several others have told me the same rule of thumb, but I'm not sure it makes sense to me. Wouldn't the same rule of thumb of thumb be resulting in me getting a better house for the price than if i bought in a more expensive neighborhood?

Yes, you are getting a better house for the price. The trouble comes when you go to sell -- the next buyer will also expect a discount. You may have more difficulty finding a buyer, and may not get as much as you'd like for the house. If you love the house and plan to stay for awhile, I wouldn't worry about it.