When it comes to asis properties, are appraiser out of their mind

[Mike Schorah]

When it comes to "as-is" properties, are appraisers out of their mind???

Do appraisers just appraise by taking the ARV and subtracting repairs (and not the other costs like Real Estate Commission, Title Insurance, Escrow Fees, Transfer Tax, Termite Clearance, Roof Certification, etc)??? Why is this appraisal so high???????

Wish I could take a screenshot to show you guys. But to sum it up without pictures.......

I went to an in-person appointment today near where I live and offered $140k ($280k is where I put it with the comps times the 70% rule minus the $65k rehab that I'm projecting). The owner said that it appraised for $218k. Sure enough, he sent me the appraisal and it appraised for $218k which makes absolutely no sense to me.

The comps are putting it at roughly $280k. Here are the comps from the appraisal:

https://www.zillow.com/homedet...

https://www.zillow.com/homedetails/29-Northfield-Rd-Newark-DE-19713/72898096_zpid/?

https://www.zillow.com/homedetails/710-Manfield-Rd-Newark-DE-19713/72898217_zpid/?

The comps that I have are:

https://www.zillow.com/homedet...

https://www.zillow.com/homedet...

I would put the ARV at $280k after including the fact that there is a tool shed (might need to be torn down) and a sunroom. It has the attached garage like the property at 706 Manfield Rd has.

Do appraisers just appraise by taking the ARV and subtracting repairs (and not the other costs like Real Estate Commission, Title Insurance, Escrow Fees, Transfer Tax, Termite Clearance, Roof Certification, etc)??? Why is this appraisal so high???????

[Arsen Atanasovski]

Quote from @Mike Schorah:

When it comes to "as-is" properties, are appraisers out of their mind???

Do appraisers just appraise by taking the ARV and subtracting repairs (and not the other costs like Real Estate Commission, Title Insurance, Escrow Fees, Transfer Tax, Termite Clearance, Roof Certification, etc)??? Why is this appraisal so high???????

Wish I could take a screenshot to show you guys. But to sum it up without pictures.......

I went to an in-person appointment today near where I live and offered $140k ($280k is where I put it with the comps times the 70% rule minus the $65k rehab that I'm projecting). The owner said that it appraised for $218k. Sure enough, he sent me the appraisal and it appraised for $218k which makes absolutely no sense to me.

The comps are putting it at roughly $280k. Here are the comps from the appraisal:

https://www.zillow.com/homedet...

https://www.zillow.com/homedetails/29-Northfield-Rd-Newark-DE-19713/72898096_zpid/?

https://www.zillow.com/homedetails/710-Manfield-Rd-Newark-DE-19713/72898217_zpid/?

The comps that I have are:

https://www.zillow.com/homedet...

https://www.zillow.com/homedet...

I would put the ARV at $280k after including the fact that there is a tool shed (might need to be torn down) and a sunroom. It has the attached garage like the property at 706 Manfield Rd has.

Do appraisers just appraise by taking the ARV and subtracting repairs (and not the other costs like Real Estate Commission, Title Insurance, Escrow Fees, Transfer Tax, Termite Clearance, Roof Certification, etc)??? Why is this appraisal so high???????

I would ask the seller if you can do a appraisal selecting your own company/person and then challenge it.

[Steve Vaughan]

Quote from @Mike Schorah:

Do appraisers just appraise by taking the ARV and subtracting repairs? I offered $140k ($280k is where I put it with the comps times the 70% rule minus the $65k rehab that I'm projecting). The owner said that it appraised for $218k. ??? Why is this appraisal so high???????

 This appraisal sounds about right actually. 

$280k minus repairs of $65k sounds shockingly like $215k.

Appraisers don't bake in antiquated wholesaler MAO formulas.

And stop offering with so many zeroes. Make your offer look like it came from your calculator.   Be specific.  

[Jay Hinrichs]

Quote from @Steve Vaughan:

Quote from @Mike Schorah:

Do appraisers just appraise by taking the ARV and subtracting repairs? I offered $140k ($280k is where I put it with the comps times the 70% rule minus the $65k rehab that I'm projecting). The owner said that it appraised for $218k. ??? Why is this appraisal so high???????

 This appraisal sounds about right actually. 

$280k minus repairs of $65k sounds shockingly like $215k.

Appraisers don't bake in antiquated wholesaler MAO formulas.

And stop offering with so many zeroes. Make your offer look like it came from your calculator.   Be specific.  

exactly they dont appraise to give a flipper a profit.  in a hot market an owner user may see that as a fine deal.

[Bob Stevens]

1st off I would NEVER listen to an agent 2nd, All due respect. If you do not know the value, then you should not be buying it. When one is doing business in their market, they should know exactly what it will be worth when reno is completed.  I can tell you on any street in all my markets in 15 seconds. I suggest you connect with an investor that has more experience, learn then go on your own. Or simply run your own comps and show the owner. If they are stubborn, move on. If you are correct, it will not sell anyway
and they will come back. NEVER be afraid to walk away :)

Good Luck 

BTW, the appraisal seems correct, If repairs are only 65kishl yes, they will take a fully renovated property and subtract about the repair costs. Why you think if the ARV is 280k and it only needs 65kish, it should sell for 140k proves my point. Vis versa, Buy for 140k, put in 65k, and now its worth 280k NO., PLEASE connect with an experienced investor,

All the best 

[Carolyn Yates]

The appraiser should include profit on the renovation costs as no one would take on the project for free. So, as an appraiser, you would estimate the ARV and then subtract the repair costs, profit, and then possibly rent loss and/or lease-up costs depending on what type of property it is. If SFR you probably would not include rent loss and lease-up, but would be included for a multi-family.

[Bobbie Pryor]

I went through them and made a deal to buy a house, I had explained that I desperately needed a place to live.  The deal was made, before I could pay for it bc they wanted cash, I caught covid.  Still have it. I kept in touch, letting him know, he said no problem,  let me know when you are ready to close.  I touched base yesterday,  they sold the house out from under me AFTER already having a verbal and technically written agreement seeing as the deal was mad3 through Facebook and I kept all messages.  I'm bringing suit against them. I'm finally going to stand up for myself against shady businesses