There is no relationship between the value of a house today and what the current owners paid for it. Home buyers like to find out how much the sellers paid for the home. Some want to use that information as the basis for an offer.
It is interesting information but there is no relationship between what the current owner paid for a house and the current value of that house. Sometimes it is good to know that the seller paid more than you want to offer. Some sellers can not afford to accept an offer that won’t pay off their mortgage.
When someone purchases a home and uses financing the lender who is providing the financing has the property appraised. The appraiser looks at how much similar properties in the area have sold for in the last year or so. The subject property is compared with comparable properties and adjustments are made.
If the home buyer offers more money than the appraised value the buyer may have to bring more cash to the closing. Sometimes the buyer and seller renegotiate the sale price. Sometimes the buyer decides not to proceed. What happens when a property does not appraise for the amount offered depends upon how the purchase agreement is written and on what kind of financing is being used.
Minnesota appraisers have training and licenses.
Low appraisals happen. Pricing a property correctly is important. Even in today’s market, we are seeing houses that do not appraise for as much as they are listed for or as much as the buyer offers. It is possible to get multiple offers for more than the appraised value of a home for sale.
