Question on if I am going the right direction on this?

I found out about a piece of property that is going to auction this friday, and have personally looked at this property yesterday. But I am unsure how to calculate its FMV. This is going to be an investment property, but also my residence (first time homebuyer). Just trying to start out right and try to get a home with a little equity already built in.

I am trying to find out what should my maximum bid would be on it at the auction. So my guess is to try to get it for 80% of FMV. That would at least help me avoid PMI. But based on my limited access to MLS, etc. I have found out from the assessor the following.

Appraised Value $70,240
Assessed Value $13,350

For which the appraised value is approx. 90% of FMV, correct?. So that makes FMV to be $78,044.

So my bid amount would be $61,000.

But the owner said that when they got a refinance loan, it appraised at $100,000.

This all confusing to me, so if anyone can shed some light here or give me some assistance on what is best, I would appreciate it.

If there is a valid, written appraisal for $100K, then it’s probably worth about $100K.

The “Assessed Value” usually means squat.

<<For which the appraised value is approx. 90% of FMV, correct?. So that makes FMV to be $78,044.>>

I don’t know what this means but it makes little or no sense to me. The appraised value should be the FMV because an appraisal is an appraiser’s opinion of the FMV.

Your bid should be the amount that you can afford to pay for the property, leaving room to accomplish whatever improvements that you need/want to make and then be able to move the property according to your business model (noe of which we are privy to at this point).

If the proeprty will appraise at $100K and you can get 80% financing, and you want to bid what you can get funded for, then the bid would be $80K…but I would validate that the appraisal is accurate and up-to-date.


you need to talk with a lender BEFORE you bid. most purchase money loans LTV requirements are based upon purchase price; not appraised value.

tax values mean nothing; i would also be caution of rely too heavily on the reported appraised value of $100k. do your own due diligence by selling what similar things are selling for in the neighborhood by checking MLS as a sanity check

I think we all need to step back here and just remember the question FMV.

Fair Market Value. That is what is the Market willing to pay. When a person gets refinanced the mortgage broker is trying to get paid by getting a loan done, so they influence the appraiser to within reason get a property to appraise at a certail value. If you did a study of all appraisals done on Refinances. I am sure you will see that most trend to the high side of comps in the area, or they select very interested comps that make the value higher. This gets the loan closed.

Now, FMV. Fair MARKET Value. It is what the Market is willing to pay. Many Realtors will pull listings and show you. The problem is that some of them will pull active listings. This really doesn’t help you much. Remember a place is for sale. It hasn’t sold. I could sell a 1bd/1bath for 1Million if I wanted. No one will pay it, but I can list it for that much if I choose. What you want to see is what properties HAVE sold for in the past few months. That will tell you what people are WILLING to pay. That is the market.

Typically you can check public records of the neighbors, you can make friends with a realtor, you can use a local paper (most have sections that show recent sales), etc. But again focus on CLOSED deals.


It’s not a replacement for MLS, however, it is a decent indicator of the comps.

FMV = Comps minus repairs combined with neighborhood / property nuances that may take away or add to the value. Of course, you never really know what repairs were needed on the houses listed in the SOLD comps.

even with a lot of research, closed sales/comps, etc are just an ESTIMATE that will give you a range for the price. Morever, in today’s transitional market, comps are less meanful. Stuff that closed 3-4 month ago may not reflect current prcing.

sure, MLS has plenty of idiots with over-priced houses, but if there are plenty of listing in an area, you will see a good range and get a reasonable good idea. Your not going to pay FMV at the auction anyways.

I would find the cheapest, similar house listed, take $10-15K off and then bid up to about 70-80% of that figure (depending on what I want to do with it).

spending a lot of time research auction properties can be a waste of time; I’ve done that and seen 50 people show up and bid (with a dozen going higher than my top bid). I’m not suggesting to be un-armed and unknowledgable, but you pay below FMV to protect yourself in case you estimated the market price incorrectly.