Bank appraisals

[Tony Reale]

Just closed on a flip where my realtor and I estimated the ARV to be about 230K. This was about 3-4 months ago when we started negotiating. Original plan was construction loan with 20% down. At closing the bank told us the appraisal looked good and they just financed the whole deal and told us to hold our funds for the rehab. After looking at the banks appraisal and comps it came back at 263K after being put back together. I called my realtor and he still says no way 240K at best.

Obviously good news either way but have some questions about bank appraisals.

They have the basics of our rehab budget but it was as simple as 1000 dollars for bathroom 1, 2000 dollars for bathroom 2, etc.

Does this just help us on the front end with the financing or are we under value on the house?

If I wanted another opinion should I ask another realtor, pay for another appraiser, or both?

New to this so asking new question. Can the market change this much in 3 months?

Don't want to leave money on the table but also a quick sell would be preferable to top dollar. Enough room in the deal at 230K for a nice profit.

[J Scott]

There are two distinct definitions of "value" when it comes to selling a house:

1. What an appraiser thinks the house is worth. This is what the appraisal comes in at and the amount the bank will lend against.

2. What buyers think the house is worth. This is what you'll end up getting offers/contracts at when listing for sale.

In theory, the two should be pretty much the same, but oftentimes, they are very far apart. You need to plan your ARV around the lower of the two numbers, as that's likely what you'll end up selling the house for.

In this case, plan for a $230-240K ARV, and if you get higher offers (and the appraisal comes in), consider it a bonus...