Multifamily Appraisal Question

[Derek Meyer]

I’m under contract on a vacant duplex that is move in ready and we should be getting the home inspection tomorrow. I’m offering over asking price (won against 6 people bidding) and the appraisal likely won’t meet the offered price (which I’m ready for).

I want to propose to the seller to let me start filling it with tenants now before the appraiser gets there so I can show actual rents instead of leaving it up to them.

A) Would this help it appraise higher? (Thus allowing me to hold more of my cash)

B) is this a legitimate strategy since I am not the property owner yet?

[Austin Martel]

I'm in Texas so my opinions my not be helpful for your market but appraisal practices are similar in a lot of states.

A) Yes, in theory, if you could somehow get someone moved in tomorrow it would appraise higher (probably slightly in a hot market) as the appraiser would not need to add as much rent loss and he/she would use comparables with similar occupancy. However-

B) I would caution against it because you can't rent out something you don't own unless you are acting as an agent for the current property owner. You could (I guess) act as an agent for the current property owner and try to get them leased under the current property owners name.  But isn't the appraiser going to be there in a matter of days if you are already under contract? It usually takes a bit of time to get someone moved in and paying first months rent.  If you can rent it that quickly why isn't already rented? I'm guessing it was recently renovated but I am confused on the timeline.

If you are worried about the appraiser low-balling you on market rent - then send him the data that you see in the market or comparable leases if you have them.  Congrats on getting the duplex under contract and I hope that helps!