Most places are appraised at closing by the bank, however if it's a purchase to financing deal (ie you didn't pay cash for it) the appraisal somehow "magically" seems to come in right around the purchase price, unless you really overpaid.
The purchase price is the major determining factor.
Of course, if it was somehow clear title, the appraisal comes in at fair market price more often than not...unless you get an appraiser who is trying to cover their butt.
I usually purchase properties well under market, and have a clear title (I buy on a line of credit first) about 2/3 of the time I get a fair appraisal, the other 1/3 I get a very conservative one (it's hard for some appraisers tonsay it's worth upwards of 50% more than the purchase price even with renovations, so they go with a lower amount).
With a purchase depending on financing, I've never really seen it come in more than about +/- a few thousand relative to the purchase price.
It's just the way the game works.
As for the second part, I gather you're talking about flipping the purchase of a presale during your, usually 45 day, grace period between completion and final payment. Yes, you can do this however it doesn't work very often because yours isn't the only one coming on the market at the same time and you're usually not the only one trying to do this. The results are a glut of highly motivated sellers all trying to dump their property at the exact same time before they need to come up with the money.
New Builder homes are often appraised by a bank under a “blanket appraisal”. The bank appraises the homes based on drawings for each model that will be built. So, another appraisal doesn’t typically occur once it’s built unless it’s increased in value and the borrower wants to borrow more, blanket appraisals also give the buyers peace of mind knowing that any lending will be based on the blanket appraisal amount, even if the market value were to fall. Blanket appraisals saved a lot of customers during 2017 when market value fell drastically. Some people buying re-sale homes were facing situations where the appraised value came in much lower than the purchase price......forcing the buyer to come up with the difference in order to close.
Whenever I see or hear someone talking about buying 'off plan' and then contemplating 'flipping' before closing, I think of all the Brits who did this in Spain with vacation properties. It worked out fine for some but for others who got caught 'holding the bag' when the vacation property market there collapsed, it was disastrous. Many could not close and so had to default and lose their down payment. Others closed but then could not find a buyer anytime soon and ended up even worse off, having to sell at a significant loss.
Sometimes, being 'smart' is not such a smart idea. No one has a crystal ball that will tell them if the real estate market in a given area will continue to rise rather than tank tomorrow. The reward may be attractive but don't forget to consider the risk that also exists.
Speculative bubbles occur all the time in all kinds of 'investments' intended for a quick 'flip'.
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