Help Understanding Appraisal

[Michael Crist]

Hello! 

I’m pretty new to real-estate investing. I have one property that was silly easy to work with because my partner got it from his family a decade ago for a fraction of what it goes for today. 

I’m looking at getting another property to do a “live-in-flip” while my girlfriend is finishing graduate school. The home is owned by her mother. 

It appraised for $180,000. This is the price her mom wants to start at. 

The updated comps in the area are going for $252,000 to 278,000. I suspect it’ll go for much closer to $270,000 because the range seems to vary based on the sq footage. 

The thing that I’m really trying to understand is what the appraisal takes into consideration. The home needs a lot of work. It needs a complete kitchen and bathroom remodel. The floors need to be re-finished. The windows are from the 1950s. The HVAC is approaching 20 years old and has 3-5 years of life left. The roof is also approaching 20 years old; however, I’m unsure how much life is left. The electric box is only a 100 amps. It may need to be upgraded to handle the size of the home/modern appliances. Even after all these things, the garage still needs about $2000 in repairs. The concrete porch is starting to crumble(it is a small porch tho). I’m sure I’m missing somethings that’ll be uncovered as I’m over there more. 

So, my question is, did the appraiser take all of this into account when they gave us the $180,000? Or, are we suppose to have it inspected, have these things pointed out and then negotiate downward on the price?

We plan on doing a lot of the work ourselves, but even then, it feels like all of the work needed could make it to where we just break even at the end. 

Any thoughts are greatly appreciated.