I don’t care how deep your pockets are. If the owner doesn’t want to sell, you are not getting the property.  If it isn’t for sale, you can’t buy it.  So if you find one of a kind property that you have been searching for and there is none like it in the area, you had better pay the asking price or take a chance with that sick feeling in your stomach after someone else purchases the property and sets the value of the find.  Did you ever wonder why a property was priced over the bank appraisal?

Have you ever wondered if appraisers were involved in car purchasing?  Nobody would be financing cars.  Soon as you drive it off the lot your value just dropped 20%-30%, yet the bank still borrows you the money on the poorest investment you’ll ever make.  Then why do the banks use an appraiser to put a low value on something that will appreciate?  The reason is clear – if you default on your loan they want a quick sale to get their money back.  So the bottom line is this – if you need financing, you’ll be limited to what the bank can turn the property for on a quick sale.  The only question you should be asking yourself is, ‘Can I afford to buy this property without mortgaging it to the bank?’  Taking out a 2nd mortgage or a home equity loan would make more sense if you really want to stay happy.  Then you do your due diligence to establish the real value of the property.  Appraisers and bankers don’t put any value on availability.  After all, what can you really expect from a bank appraiser for what the bank is paying them? 

Property evaluation process has to consider the buyers wants and needs.  For instance:

A 65-year-old gentlemen recently widowed, shared a dream of spending their retirement on a lake in northern Minnesota.  The property’s asking price was 22% over licensed appraisal value.  The Realtor advised against the purchase.  Lucky for the older gentlemen, he wasn’t going to let licensed appraisal value determine his happiness or the real value of the property.  He bought it.  He just set the real value, and he also helped set the licensed appraisal value on the near by properties.  You see, the people who know and understand the real values in Real Estate are on the leading edge making the purchases and setting the values.  If you let the bank set the value through their appraisal system, you’ll be behind the curve.  The bank should be saying, “This is all we will borrow you for the purchase”, but too many people are fooled by the banks appraisal thinking that their appraisal is the value of the property.  It really only says, this is the amount of money we will borrow you on this property.   

The older gentlemen found his; it was easy for him and he wasn’t going to let a licensed appraisal value stand in the way of his next 10-15 years of happiness. His family was going to inherit the property and he could care less about resale value.  He wasn’t going to throw his money away, but at the same time he wasn’t afraid to use his money to buy pure happiness.  Even at 22% over the appraisal price, this type of property appreciates quickly and within a few years the property will be at that value.  The majority of time your property will appreciate in value from what you paid for it because everyone knows there aren’t too many people who are going to sell real estate of this kind for less than what they paid for it.

Appraisers, working for the bank for $150-$200, what do you think you can get in professional work value for $150-$200? Most professionals I know wouldn’t walk across the street for $150 if they have to put their name and reputation on it.  Can you imagine someone if they have to give you $500,000 for your property, your asking price, and the buyer’s bank is going to spend a whole $150-$200 to figure the property value.

So, if the property is available and there are not any others in the area for sale like it, you might say the difference between the bank appraisal and the asking price is the cost of availability.  When you buy it you just set the new value, so where is the down side?  We can help you identify it if there is any or also point out the up side values beyond availability.

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