daw1@mhuxl.UUCP (WILLIAMS) (01/08/86)
This is in reference to the articles about "no money
down" and "be a credit card millionaire" real estate deals.
Someone said that the house would be appraised at the price
it was sold for. But...
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What does selling price have to do with value in a case
like that? I can certainly appreciate your wife's desire to stay
away from someone involved in one of these strange deals, however!
I took a college course in real estate and the appraisal process
is fairly straight-forward: Let's say I am looking at a house that
someone is selling for $100K. Let's say the guy is basing his asking
price on an appraisal he has in his back pocket that says the house
has an appraised value of $98K. So I go up with a suitcase full of
cash and buy it for $50K. Then I want to get it appraised for some
reason, so I call your wife. On what does she base her appraisal?
If I don't say a word she should arrive at a value of about $98K,
give or take the normal variation of the appraisal. This would be
based on equivalent homes recently sold, reconstruction costs,
and whatever else you base it on that I can't recall right now.
If I do say that I paid $50K, why should that change her bottom
line value? What if I bought the home at a tax sale for $1000?
Does that mean it is only worth $1000?
This is not a flame! But please answer and enlighten us!
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1 2 1 Doug Williams
1 3 3 1 AT&T Bell Labs
1 4 6 4 1 Reading, PA
1 5 10 10 5 1 mhuxl!daw1
1 6 15 20 15 6 1olsen@ll-xn.ARPA (Jim Olsen) (01/13/86)
In article <439@mhuxl.UUCP>, daw1@mhuxl.UUCP (WILLIAMS) writes: > > This is in reference to the articles about "no money > down" and "be a credit card millionaire" real estate deals. > Someone said that the house would be appraised at the price > it was sold for. But... > > --------------------------------------------------------------------- > > What does selling price have to do with value in a case > like that? ... If I recall correctly, the definition of fair market value is "the price which would be paid by a willing buyer to a willing seller." This is the value which an appraiser attempts to estimate, using various generally accepted techniques. If such a sale has *actually occurred* a very short time ago, the sale price is absolutely the best indication of what the true market value is.