BRRRR- appraiser check beforehand ??

Question

Hello BP family, a question for you all.

So I recently visited one of the fourplexes in the state of FL and want to use the BRRRR for the first time.

The property is selling for 170k-  need about 20k rehab and according to the realtor the ARV is 240k.

He said the number is base on the similar house that was sold around the area,

but my question,  how reliable is this number?   Can I pay appraiser beforehand to see what they think it will be worth it?

Any recommendation or tips to confirm the After repair value will much appreciate it

Thank you all

Jason D. · Answer

@Ken Tsai are you financing this with a hard money loan? If so, they will do an appraisal, and the ones I've used have also done an ARV estimate. It's been a little low both times but I'd rather it be low than high

John Franklin · Answer

You can call a local certified appraiser and ask them to do a drive by appraisal on the property. Ask the appraiser to assume that the interior is in good condition with average wear and tear.  You have no obligation to share the info with the seller.  I’d provide them with unit mix, any operating history you have and a rent roll summary.

This should cost you less than $1,000 and could save you multiples of that if your ARV is overstated.

An appraiser does not have to inspect the property interior (or even the property) if they’re appraising it for you.  It’s your call.

Ken Tsai · Answer

@Sam Horton @John Franklin 。 Thank you for your feedback.  I actually research for the appraiser and found a website call home advisor that link the appraiser to the client throughout the nation.  The appraiser was super nice and told me that he can just take a job and make that $600, but he doesn't think it's worth my time to invest in that area and do not see any similar property that is worth $240k like what the realtor told me.    He also walks me through with the basic of how they appraise the deal to give me some idea, and looking at Zillow together with him for the property that is selling or sold within 5 Miles, we Do not see anything sell for $240k lol   Thank you again guys for your advice,  I would have got myself into a big trouble just based on what the realtor said.        I think maybe for the first few properties I should start with turnkey property first.

Sam Horton · Answer

@Ken Tsai I use an app called Remine for an AVM model. @John Franklin is right, you could always do an exterior appraisal order. Or even order an exterior BPO. Either way, they are both opinions of value. I'd still lean on a few experienced Realtors first, it's the cheapest option and you could gain a good relationship out of it.

Sam Horton · Answer

@Stephen Stokes Might be MLS member only. I first gained access through my MLS then upgraded to their premium service. If you use a Realtor, see if they have access to the app and can give you a code. Mine would be Massachusetts specific.

Jason D. · Answer

@Ken Tsai I've used both groundfloor financial and MoFin Lending, and both did ARV estimates with the current value appraisal. Appraisals are done after the contract is executed by both parties (buyer and seller).

Because hard money lenders have a max LTV that they'll lend, they want to know the ARV as well....

Ken Tsai · Answer

@Jason D. 。I got pre-approved letter already from my lender before I start to shop around,  at what point would they do the appraisal for you?    what is the lender that you refer to gives your the appraisal and ARV estimate ??  Thank you

Stephen Stokes · Answer

@Sam Horton

It seems you have to get a referral code for that app

Lee Bell · Answer

Yes get an appraisal. I would much prefer to see the inside than "assume" good condition.

You risk making an ass out of u and me. So I learned in college.

Also get a physical inspection, it is not the same. The inspector is concerned with the physical building and improvements. They look at pipes and electric panels, test the HVAC. Me not so much. The appraiser is focused on market value. As the appraiser I'd say inspect first then give me their report before I do my inspection / viewing. So if there are hidden problems I can factor them in.

Ken B. · Answer

@Ken Tsai

Ken if you have a realtor I would ask his recommendation for an inspector. Remember these are floor up rehabs and need a great inspection. If the roof is bad and you purchase figuring 20k then you find out thru your contractor (after its yours) that it leaked down all the side walls and its now a rebuild from ground up its now a huge game changer. So I'll spend a few hundred to save thousands. Inspect in and out.

BRRRR- appraiser check beforehand ??

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