Appriasal value question

[David Niu]

Hello BP friends,

Getting ready to close on small flip , I have a question on the house value. Hope you guys can share some insight.

This is a SF in superior township, Michigan. Seller is asking 185k, this property has some issues, some water leak in the basement, could be due to uncleaned gutter neglect, poor drainage, causing the wood to rot behind the gutter. Other than that it needs paint and carpet. Also a above ground pool that needs to be removed.

I would estimate this house needs 15-20k worth of repairs.

Let’s say the deal gets accepted at 185, but gets appraised at 175, and we still buy it at the 185 price. When we finish the rehab, is there still money to be made? House do go pretty quick around here and getting bid over asking. Is this even worth it at the end?

As for the appraisal, once a house gets appraised, does that lock in the value of the home? I am concerned that if we buy it over appraised price, and rehab it, that it will only be just over what we pay for it.

The comps are around 170-175 and for a slightly larger house fully rehabbed, goes for around 200k (1200-1500sqft).

Thank you all for your time and I am happy to clarify the post if needed.