Bank says duplex apprasial is expensive ($835)due to rent schedules evaluations etc.???

Question

I asked if it will be an in house appraisal, drive by appraisal, or a full appraisal so I can have an idea of my costs. This is a duplex, im putting 20% down, getting a 30yr fixed mortgage.

Here is the answer I received from the bank:

-"As  for the appraisal – it does need to be a full appraisal.  We ordered it today and we heard back from one appraiser that gave us an estimated  price of $835.  Right now we are checking to see if we can find  something a little lower in price.  It is higher because of the rent  schedules, etc that need to be done since it is a multi-unit property"-

This is a duplex and from my understanding regardless of the type   of financing standard practice is that multi's up to 4 units are valued   the same way single family homes are, using comps. Rents/income is  only used on 5  units or more as a source when determining valuation  which is where the  more expensive appraisal process comes in. So I  wouldnt think the  appraisal should cost much then any other single  family or other duplex type property.

i mean..... what should an appraisal cost?

Account Closed · Answer

@Owen D.

Rally must of been giving them away too cheap because the number is disconnected :)

Took a bit of calling around but I already found one guy, Better Living Appraisal Services in CB,  which will do it for $500.

I called Michelle and left her a message. I will see what she thinks tomorrow. thanks Owen I wouldnt of pushed my banker otherwise, a local 4-plex last month for 550 was pretty good evidence to give them.

Account Closed · Answer

@Owen D.

I received an email saying they found one for $700 that they can use... which is still the highest dollar amount and on the smallest property in this forum thread.

lol, I emailed them what you said Owen and they emailed back if I have any recommendations on appraisers to add to their list.... I didnt think they could do that, I figured banks had pre-set appraisers they had to draw from. Im gonna do some google'ing

Account Closed · Answer

@Jennifer Tornus  yeah, practically word for word from my post is what I told them regarding method of appraisal.

From reading other past forum posts sounds like just like you say, cant do much about it.

No I dont need the income to qualify for the mortgage, which is mainly why im kinda surprised at this. I have a commercial LOC (CLOC) also with more then enough room on it that I could simply pay cash for the property but Im wanting the nice long 30yr fixed mortgage product to keep my cash free and keep my cash on cash return high. They did a free in house appraisal for my CLOC. I understand that since its a mortgage they arnt keeping the loan in house and so the appraisal is likely a requirement of the secondary market... but geez!

Owen Dashner · Answer

BTW, appraisers will likely still use both an income and comp approach in the appraisal, even though it is less than 5 units.  Don't be surprised if the comps are all over the place - not many 2-4 unit solds in O-Town in the last 6 months.  You might have some way north, south or west from your subject property because of lack of solds.

Owen Dashner · Answer

That's funny.  I would personally recommend Michelle McWilliams - (402) 320-4634 (she has her own company).  And the other company who did my 4 plex appraisal is Rally Appraisal (I don't know them personally) - (402) 592-6733.

Owen Dashner · Answer

Isaac, that appraisal is high.  The fourplex I bought last month on 48th & Harrison was only $550 (full appraisal).

Kelly N. · Answer

We purchased two triplexes in 2013, had to pay $615 and $665 for the appraisals through the same lender.  We are buying a quad right now and the appraisal fee is $680.  I haven't asked this time around, but I think a SF was $4-500 when we bought the first triplex.

They did a little market research to see how the rents compared to similar units in the area, by # bedrooms and square footage.  It was the type of info a Realtor could probably pull up in 5 minutes.

We'll see what this one says, but the first two were a joke, honestly.  Or we are REALLY good at getting to the exact value of a property.  The first one said it was worth exactly what we were paying for it (got it for about 2/3 the asking price) and the second one said it was worth $1000 more than what we were paying, so we were within 1% of their "value".  It was kind of annoying, but at least it didn't delay the loan.

Kelly

Jennifer T. · Answer

I think you are correct also, but am not totally sure.  Either way, unfortunately, you can't always control what your bank wants/requires.  Have you told them what you wrote in your post?  Do you need the rental income the property earns to qualify for the loan?

I bought a duplex four years ago and got a HELOC for it two years ago.  An appraisal was needed both times and both times it was a house appraisal.  The appraisal for the loan was around $375 and the appraisal for the HELOC was around $525.  When I bought the house, I was well qualified for the purchase price without including the rental income.  But then, it is also an owner-occupied because I have always lived on one side.  Maybe that makes a difference?  Not entirely sure, but there is my two cents.