Appraisals, San Antonio Investment Property

[Patrick Ng]

Hi all, working on closing a property currently. I originally went into the deal with thought I was buying under asking so I'd have some equity in the property in addition to the down payment in addition to cash flow. I made my original estimates with comps, calculating both sale comps as well as rental property comps with guidance from my realtor.  About a week away from closing, and just had the appraisal come in , and it is just slightly above the renegotiated price after due diligence and negotiations. With this figure being lower than what I originally ran my numbers with when making my offer and moving forward, the deal doesn't look as attractive given the lower amount of equity. Anyone with experience with this? Moving forward, any pearls anyone learned about so as to not over value the property like I did when running my original numbers? 

Thanks!  

[Jim Cummings]

@Patrick Ng. My experience (28+ years) is if the Appraisal Value is Contract Price or just minimally lower (Appraisers do Know what Contract Price is) the Appraised Value will be the Contract Price. If the Appraisal Value is over Contract Price, the Appraisal will be Contract Price PLUS about $2K, as Appraiser is only asked to justify lender is making a good decision on the Loan.  Furthermore, if Appraisal came in Significantly More (Value Judgement) than Contract Price, the Appraiser may have questions to answer from the Lender. 

Keep in mind - Appraisal are done by Humans. IMO, if you sent 3 different Appraiser to the Property - you'll get three different Values. Ideally they are very close - but will each be different.