Real Estate

Bank house appraisal vs. actual value?

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  • Sep 8th, 2020 12:17 pm
[OP]
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Feb 27, 2008
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Bank house appraisal vs. actual value?

Hi all,

Is there a typical estimated difference between what the bank appraises your house vs what a real-estate agent would for a fair price on the market? I understand the banks tend to go on the lower side but what are we saying here, 5%? 10%?

I just got my appraisal from the bank and I am pleasantly shocked and now wondering if based on that alone, my house is worth much more and it's worth moving.
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Aug 20, 2020
389 posts
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Scarborough
240sxer wrote: Hi all,

Is there a typical estimated difference between what the bank appraises your house vs what a real-estate agent would for a fair price on the market? I understand the banks tend to go on the lower side but what are we saying here, 5%? 10%?

I just got my appraisal from the bank and I am pleasantly shocked and now wondering if based on that alone, my house is worth much more and it's worth moving.
Here is my take..
Both appraisers (used by banks) and realtors look at comparable sales in the neighbourhood to base their valuation off. In a rising market, the difference is banks are looking at the past (i.e. realized value) vs. realtor is looking into the future (i.e. factoring in growth that could be realized based on demand). So, the rate of growth in prices + time period to sale could be the justifiable difference.
Neil Joseph
Mortgage Agent, Broker Lic #10530
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Sep 14, 2006
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NeilJoseph wrote: Here is my take..
Both appraisers (used by banks) and realtors look at comparable sales in the neighbourhood to base their valuation off. In a rising market, the difference is banks are looking at the past (i.e. realized value) vs. realtor is looking into the future (i.e. factoring in growth that could be realized based on demand). So, the rate of growth in prices + time period to sale could be the justifiable difference.
Sorry to threadjack but what about the appraisal from the city for property tax purposes vs bank appraisal?

Are new builds' property taxes calculated based on purchase price before taxes multiplied by the given city tax rate? In a rising market, that would mean grossly over inflated property taxes for new builds.
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Jan 22, 2012
447 posts
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Bradford
We just had our house appraised.
It came back with an appraisal value of $670,000.
The recent sales on the street for similar homes to ours are.
$780,000
$835,000
$740,000 (has 1 less bathroom and bedroom)
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Jan 6, 2002
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Toronto
The only valid "actual value" is an actual, recent, open market sale and closure of the actual property.

Everything else is an appraisal, pattern fitting, or "guess".

e.g. there is research that has documented that the type of decor and pictures you have in your house during appraisal, the level of cleanliness, the weather on the day of the appraisal, etc. can swing values 5-10%.
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Jan 7, 2019
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Bank appraisals are just that, it's for the bank and banks are known to be conservative. Normally, it would come in at the value of the purchase and sale agreement unless there was something significantly material missed.

Ultimately, in the end, the price is what someone is willing to pay for it.
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