Realtor says the bank appraisal can tell home value...

[Ross NA]

Currently, my spouse and I are renting an apartment. I found a home that is unoccupied by the owner that has an asking price of $148,000, but I know from comps that similar homes sold recently for about $133,000 or so. We offered $138.5k but the seller declined. afterwards my realtor sent over a list of comps which the selling agent did not disagree with. From the sounds of things the seller will sell between $145k-149k. 

I think the seller is being a bit irrational and we are we are considering walking. Our realtor suggested that we should offer $145k, and because it is contingent on the bank's appraisal, we will not be paying in excess of market value. I realize banks are more careful now post-bubble but I have done a bit of research and it appears that banks uncommonly appraise homes for less than what they sell for, and usually above. I also do not like that appraisers SEE the amount we want to buy the home for--just how could that not bias the appraiser. 

Also, because we are first time home buyers and only putting down 3-5%, the agent says that the buyer might come down if it appraises for less than it is worth. I do not like the idea of using a bank appraisal as a bargaining chip, and again I have some questions about their accuracy. 

There are not a lot of alternatives on the market in the area we want to be in that we also like; the only other alternative at this point, if we do not get this home, is to rent for 3-6 months to see if the inventory improves. 

Anyways, I am interested in your thoughts. What do you think of the realtor's advice? Is the bank's appraisal accurate, and is it a good idea to use it as a bargaining chip?

[Russell Brazil]

Originally posted by @Ross NA:

I appreciate the comments so far. If a bank's appraiser was really good at valuing the property, nationwide, I would expect that roughly 50% of appraisals would come under the offer price, and 50% above, but that does not seem to be the case. 

 Thats because you misunderstand what an appraisal is. An appraisal is not to determine the value of a property. An appraisal is one, of several tools that a lender uses to mitigate their risk in lending on a property. The appraiser starts with the contract price then works backwards from there to see if there is data in the market to support that price. The market ultimately determines the value of a property, and the contract price is the ultimate data point of the market showing the properties value.