Appraisals are somewhat grimy IMO. When our house was being appraised, the appraiser asked for the P&S price as part of his research. To no one’s shock, the appraisal came in just over the P&S price.
(To some extent, I get it. I’m an arms-length buyer. I’m willing to pay $X. That’s strong evidence that that’s the arms-length market price.)
We offered significantly over asking and offered to cover the difference between appraisal and our offer, if it didn’t appraise for our offer, in cash. Ours did not appraise for our offer and we had to cover around $14K in cash.
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As for the Zillow topic:
Zillow is fantastic for sellers. I was offered well above market for my house, paid at least 5% less in fees, I could do everything remotely, and I could close in 14 days.
Fuck traditional realtors. Our buying experience sucked. Zillow made selling a breeze and I would recommend it to anyone looking to sell right now.
I asked my banker about this issue (as I had the same concern), and she shrugged and said usually it usually isn't a problem. What you bid is what we usually consider market value. This is the Greater Toronto Area in Canada (bangs head on wall).
This assumes that it's better for bankers to decide how customers spend their income than for the customers to decide that.
Also, "income driven mortgage" is really "salary from large employer driven mortgage". For everybody else it either underestimates, breaks down badly, or both. Especially business owners. "I sign my own payroll check" is not what a banker wants to hear.
(To some extent, I get it. I’m an arms-length buyer. I’m willing to pay $X. That’s strong evidence that that’s the arms-length market price.)