How much did you pay for the house.

I don't want to answer as I bought it cheap... If I don't answer, do I risk them giving me a lower number?

thanks,

-Ed

When I was asked this question for a re-finance, I presented to the appraiser my receipts for the upgrades. New roof, copper pipes and new electrical panels. His appraisal did not reflect these upgrades. My lender wanted me to put more down. After receipt of his report, the comparable properties did not have any of these upgrades and were valued more than mine.

I consulted with an expert who told me the appraiser sent out by the lender had to "low ball" the appraisal to keep working with them. I then hired an outside licensed experienced appraisal who came in with a much more realistic value. I had my new appraisal contact the lender to explain where their appraisal went wrong. I had more comps showing the real value.

I closed on the loan an then sent my lender with a bill for my appraisal. After some threats of a law suit, they sent me a refund for one of the two appraisals that I had to pay for.

I had a similar situation with the code enforcement officer who was trying to get me to not improve the property more than 50% of the value in repairs. Due to it being in a low risk flood zone. I guess a rule of thumb is no more than 50% worth of the value in repairs.

Value is subjective. I asked him what is the property worth? And he asked me well, what did you pay for it? I said that doesn't matter, what is the property worth?. And since he didn't know, I told Him that the county has it assessed at 240 some thousand. And he told me that I could put 120,000 into it and repairs. Fine. I only paid $3,500.00 for it plus back taxes it refinanced the summer for 55,000. I also didn't mention to him that I was in the process of appealing the tax assessment on the property which I did and was successful at.

The only concern that your appraiser should have is what it's worth now to refinance or what it's worth in the future if you're doing a construction loan based on future after repair value.

If it's the appraiser that you are paying for on the purchase of the property I'm surprised that you were there (typically the buyer is not made aware of when the appraiser goes in, etc). If you are doing a re-fi and you are the owner then that makes a bit more sense - they are most likely seeing what you are trying to get out of the property. Some will "see what they can do" to get you to that price and others that don't care - typically won't even ask you.

They may just be "chatting it up" with you. As some of the others stated it doesn't really matter. If you purchased it low and they come in higher - it could help you only in the fact that you have "immediate equity" in the property. That could come in helpful if you didn't put down at least 20-30% but now you could "argue" that you don't need to put that much down because the property is worth more (so for example - you purchased at $70k but the appraisal comes in at $100k - you will have 30% equity in the property).

I agree with NE that technically it's none of their business; however, I also agree with Johnny B. that they want to do right by the bank and by you. When someone is getting an appraisal for a refinance (your goal, I assume?), then really it's up to the bank to decide if they need to be more stringent. Comps are readily available.

Here's how I'd answer....

"Well, there's a house just down the street that's similar to our, and it sold/appraised out at right about what we're hoping the value to come in at on this one."

Then leave them that freebie bit of information to go find the numbers you need to make the deal work.

We had a house appraise a couple of weeks ago that we're selling to a tenant. The appraiser knew how much we'd paid for it (public record) but asked if we'd done anything to it. Oh, yes--replaced all the missing copper, the water heater, and the furnace, finished the basement, refinished the urine-stained hardwood floors, and transformed it from a "smoker" house to something livable.

#22,

Part of the appraiser's job is to prove the increase in value over the latest purchase price.

I give them the appraisal *I* ordered, with fresh comps before putting it on the market. Gee, guess which comps the bank appraiser uses!

I used to not like giving out that information-- but then it helped me contest my taxes. If a house is "worth" $50k in the appraisal's view, but I bought it for $10k-- that's the definition of market value. And I'd rather be taxed on a $10k house than a $50k house. And I'd rather get it valued as a $10k house in rough shape before I turn it into a "real" $50k house in good shape.

By the same token, though, if I pay $1k for a house and sell it for $35k without doing a scrap of work-- I keep my information to myself.