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I learned in my home buying process that values are mostly meaningless, and completely subject to what buyers will offer. When you buy a house, the bank orders

I learned in my home buying process that values are mostly meaningless, and completely subject to what buyers will offer. When you buy a house, the bank orders an appraisal to ensure the property is worth the offered price, in case of foreclosure. What's the first thing the appraiser looks at to determine value? Comparables, which is an industry term for similar houses/properties in similar areas and what they sold for. What's the best comparable? The offer you made on the property you're attempting to buy. It's cyclical. I agree that people should not be penalized for living in and using their homes. If I buy a house with a garage, you shouldn't get mad that I work on my car and even gasp make some noise during the day while I do it.

Consultant32452 4y ago
It's terrifying that public education lets someone graduate high school without the most basic understanding of how pricing works.
jandrese 4y ago
The entire appraisal industry is largely a scam IMHO. At most they can tell a bank if an offer is outside the realm of reason for the neighborhood, but that's basically just a search of recent sale prices. They won't even send someone out to look at a property. Last time I went to sell my house the market was in a fairly volatile state and I didn't have a good idea of what a fair price for my house would be. So I called multiple appraisal companies asking if they could give me a fair market value figure I could use for the listing. Not one of them would do it. That's not their business they told me. They basically exist as one of many dubious middlemen that takes a cut out of each home sale while offering little value.
- conductr 4y ago
  I wouldn’t disagree with you except to point out that they do exactly what they’re intended to do. Protecting the lender. Even then, it’s just one of the many checks in the underwriting process. They do however tend to thwart rapid price surges in the market. Depending on if you’re buying or selling will change your opinion on if that is good or bad.
- telotortium 4y ago
  My mortgage lender's appraisal involved an in-person evaluation both times on my house (first house purchase - initial mortgage followed by a refinance). In SF Bay Area, so maybe things are done differently where you are? I'll grant that they largely rubber-stamp the offer price, but if the property has hidden defects it might be good for the bank to try to find that out before lending.

Consultant32452 4y ago

It's terrifying that public education lets someone graduate high school without the most basic understanding of how pricing works.

jandrese 4y ago

The entire appraisal industry is largely a scam IMHO. At most they can tell a bank if an offer is outside the realm of reason for the neighborhood, but that's basically just a search of recent sale prices. They won't even send someone out to look at a property. Last time I went to sell my house the market was in a fairly volatile state and I didn't have a good idea of what a fair price for my house would be. So I called multiple appraisal companies asking if they could give me a fair market value figure I could use for the listing. Not one of them would do it. That's not their business they told me. They basically exist as one of many dubious middlemen that takes a cut out of each home sale while offering little value.

conductr 4y ago
I wouldn’t disagree with you except to point out that they do exactly what they’re intended to do. Protecting the lender. Even then, it’s just one of the many checks in the underwriting process. They do however tend to thwart rapid price surges in the market. Depending on if you’re buying or selling will change your opinion on if that is good or bad.
telotortium 4y ago
My mortgage lender's appraisal involved an in-person evaluation both times on my house (first house purchase - initial mortgage followed by a refinance). In SF Bay Area, so maybe things are done differently where you are? I'll grant that they largely rubber-stamp the offer price, but if the property has hidden defects it might be good for the bank to try to find that out before lending.