Appraisal vs Offer challenges

Paul Sandhu

Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes

4y

Anything from an appraiser is horse apples. The market price is the going price. You are the market. The seller is the goer. The appraiser is a parasite.

Brandon Carlson

Real Estate Consultant · Glendora, CA · Member since 2019 · 314 posts · 95 votes

4y

Hi. As far as determining which STRs are top performers, you can use tools like Pricelab and AirDNA. My suggestions are to pick markets close to you unless you plan to use a Property Manager that specializes in STRs.

You can speak with your lender to assist you with the appraisal gap as far as winning bids. I recently represented a buyer and the appraisal came in $18k light. The lender adjusted my client's downpayment to make up the difference. By doing this, it didn't affect our escrow and my client didn't have to come up with the difference. Another strategy is your agent can negotiate with the sellers to see if they can make up the difference or meet you in the middle.

OP

Hermosa Beach · Member since 2021 · 40 posts · 9 votes

4y

Quote from @Brandon Carlson:

Hi. As far as determining which STRs are top performers, you can use tools like Pricelab and AirDNA. My suggestions are to pick markets close to you unless you plan to use a Property Manager that specializes in STRs.

You can speak with your lender to assist you with the appraisal gap as far as winning bids. I recently represented a buyer and the appraisal came in $18k light. The lender adjusted my client's downpayment to make up the difference. By doing this, it didn't affect our escrow and my client didn't have to come up with the difference. Another strategy is your agent can negotiate with the sellers to see if they can make up the difference or meet you in the middle.

Thanks @Brandon,

I’ve been looking into that oprion: lower down.

OP

Hermosa Beach · Member since 2021 · 40 posts · 9 votes

4y

H Brandon,

“Hi. As far as determining which STRs are top performers, you can use tools like Pricelab and AirDNA.”

I’m looking at Airdna and im not seeing a section for properties that “best performers in this area”. Is their a tab I should be looking under?

Also, (I know everyone asks), but how accurate do you think Airdna’s calculations are?

Thanks!

Jeff Langley

Member since 2021 · 167 posts · 141 votes

4y

I’ve found it accurate in some markets, but not in others. It’s just another tool to arm you with info.

Brandon Carlson

Real Estate Consultant · Glendora, CA · Member since 2019 · 314 posts · 95 votes

4y

Chris MasonPro Member

Moderator

Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes

4y

Quote from @Laura Kastner:

Hi,

As most of is are pretty aware;

1. Im not seeing anying go for under asking price or even asking price (unless the place has burned to the ground & the ask is just for land.

2. How does one determine which STRs are the top performers?

3. To win a bid, usually you have to waive the appraisal contingency. Are there creative ways to do that with sinking in/ losing EMD and ending up paying an extra 10's of thousands to bridge the gap between appraisal & offer? (I'm talking having to shell out another extra 30k-100k in addition to down payment, closing costs, etc???

For example:

The initial ask is 450K, the nearby comps are around 400k, and the seller wants 500k. So you’d be stuck paying 100k + close.

Can you waive appraisal & say buyer will make up to 20k to close the gap or is that still a contingency?

Any creative ideas are appreciated :)

Thank you in advance!!!

To use your $500k example, if someone out there is willing and able to pay $500k, that makes it a $500k home. Once one or two of those close, it's a $500k neighborhood, and now the data is there, so appraisals will start hitting $500k.

The very first buyers to come along and "set the comps" to make it a $500k 'hood, often, are folks that have that extra $100k sitting around.

So, basically, if you aren't that person, then you just wait until the comps support it. Then you buy. Or you can look at less desirable homes.

The market is what it is. If there was a quick fix way to "creative" out of that fact, someone else would do it, inclusive of those folks that do have that extra $100k sitting around, and that means they have the "creative" magic AND the $100k, so they still win.

Consumers getting above average deals, in this market, are the ones going seller-direct. Not MLS, that's too late. Not FSBO, that's too late too, and with a penny pincher delusional seller who thinks they know everything because they can google search to boot, that's hurting things for the buyer, not helping (as drama goes up, probability of closing goes down). You are the first person that homeowner talks to, and the last, about selling that home -- that is the winning "creative hack" (or whatever you want to call it). This often means that this buyer has 5+ years of sales or marketing experience, they know how to close someone (people talk smack about "scummy car salespersons," but professions like that are often the very folks that win -- and win big -- in this market).

OP

Hermosa Beach · Member since 2021 · 40 posts · 9 votes

4y

Quote from @Brandon Carlson:

@Brandon Carlson I literally just read that this morning. good call. the thing i really dislike about airdna is you only get one market unless you shell out a bunch more money. due to low supply, im having to look at like 5-6 areas. so…that sucks

OP

Hermosa Beach · Member since 2021 · 40 posts · 9 votes

4y

Quote from @Chris Mason:

Quote from @Laura Kastner:

Hi,

As most of is are pretty aware;

1. Im not seeing anying go for under asking price or even asking price (unless the place has burned to the ground & the ask is just for land.

2. How does one determine which STRs are the top performers?

3. To win a bid, usually you have to waive the appraisal contingency. Are there creative ways to do that with sinking in/ losing EMD and ending up paying an extra 10's of thousands to bridge the gap between appraisal & offer? (I'm talking having to shell out another extra 30k-100k in addition to down payment, closing costs, etc???

For example:

The initial ask is 450K, the nearby comps are around 400k, and the seller wants 500k. So you’d be stuck paying 100k + close.

Can you waive appraisal & say buyer will make up to 20k to close the gap or is that still a contingency?

Any creative ideas are appreciated :)

Thank you in advance!!!

To use your $500k example, if someone out there is willing and able to pay $500k, that makes it a $500k home. Once one or two of those close, it's a $500k neighborhood, and now the data is there, so appraisals will start hitting $500k.

The very first buyers to come along and "set the comps" to make it a $500k 'hood, often, are folks that have that extra $100k sitting around.

So, basically, if you aren't that person, then you just wait until the comps support it. Then you buy. Or you can look at less desirable homes.

The market is what it is. If there was a quick fix way to "creative" out of that fact, someone else would do it, inclusive of those folks that do have that extra $100k sitting around, and that means they have the "creative" magic AND the $100k, so they still win.

Consumers getting above average deals, in this market, are the ones going seller-direct. Not MLS, that's too late. Not FSBO, that's too late too, and with a penny pincher delusional seller who thinks they know everything because they can google search to boot, that's hurting things for the buyer, not helping (as drama goes up, probability of closing goes down). You are the first person that homeowner talks to, and the last, about selling that home -- that is the winning "creative hack" (or whatever you want to call it). This often means that this buyer has 5+ years of sales or marketing experience, they know how to close someone (people talk smack about "scummy car salespersons," but professions like that are often the very folks that win -- and win big -- in this market).

@Chris Mason great answer, thank you so much for taking the tome to break it down.

Brandon Carlson

Real Estate Consultant · Glendora, CA · Member since 2019 · 314 posts · 95 votes

4y

Quote from @Laura Kastner:

Quote from @Brandon Carlson:

@Brandon Carlson I literally just read that this morning. good call. the thing i really dislike about airdna is you only get one market unless you shell out a bunch more money. due to low supply, im having to look at like 5-6 areas. so…that sucks

@Laura Kastner what areas are you exploring?

OP

Hermosa Beach · Member since 2021 · 40 posts · 9 votes

4y

Quote from @Brandon Carlson:

Quote from @Laura Kastner:

Quote from @Brandon Carlson:

@Brandon Carlson I literally just read that this morning. good call. the thing i really dislike about airdna is you only get one market unless you shell out a bunch more money. due to low supply, im having to look at like 5-6 areas. so…that sucks

@Laura Kastner what areas are you exploring?

i’m looking throughout the desert that still allows strs-DHS, JT, Indio, etc.