Appraisal Scares on Exiting your Flip

Appraisal Scares on Exiting your Flip

Flipper · Staten Island, NY · Member since 2014 · 116 posts · 31 votes

A quick note on Appraisers. 

So the buyers appraiser for my flip appraised it for 220k.

We already agreed to sell at 230k to the buyer. 

If a 220k appraisal was the final word, The buyer wouldn't get funding. They would need to come out of pocket the difference, 10k. Its an FHA buyer. Thats not happening no matter how bad they want the house unless they sold a kidney on the black market. I'm already doing a seller concession at closing to help their costs.

The deal would be dead. I was upset.  If I lowered to 220k, I'd be taken a serious Loss. 

We looked at the buyers appraisal. This gentleman didn't count 1 of 3 bedrooms in the first unit, and 1 of 4 bedrooms in the second unit along with 1 of two bathrooms. He didn't even include the sqft of the 3rd floor. He had the second unit down for 1200 sqft, when it's 1700.

He dropped the ball big time. If we didn't catch that, I'd be beat.

I know there has to be investors taking L's with buyer appraisers that screwed up. 

That situation just scared the crap outta me. 

He missed two bedrooms a bathroom and 500 sqft. Basically, another apartment. 

It's almost like he went to the wrong house. 

Do you other investors see this a lot?

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y

@Martin Sterling Im not trying to be mean...but either you or your agent dropped the ball. Part of the job of your listing agent, or you if you are FSBOing is to cut these mistakes by an appraiser off like that before they happen. You should be providing detailed comps to the appraiser along with detailed information on your property, and notes about why your property compares to the comps, or how they are dissimilar. You should also understand that accepting an FHA offer means that appraisal will stick to the property for 6 months.

You shouldnt need to get to the point where you are contesting an appraisal, as the mistakes on the appraisal wont happen with a good listing agent.

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  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    9y

    No...I have a nice valuation waiting on the counter top conveniently with the detailed value and support...not technically supposed to influence an appraiser, but they are busy and appreciate the leg work.

    But not everyone has access to MLS data, so this is much more difficult trying to assemble from publicly available data...still possible, though.

    @Martin Sterling

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y

    @Martin Sterling Im not trying to be mean...but either you or your agent dropped the ball. Part of the job of your listing agent, or you if you are FSBOing is to cut these mistakes by an appraiser off like that before they happen. You should be providing detailed comps to the appraiser along with detailed information on your property, and notes about why your property compares to the comps, or how they are dissimilar. You should also understand that accepting an FHA offer means that appraisal will stick to the property for 6 months.

    You shouldnt need to get to the point where you are contesting an appraisal, as the mistakes on the appraisal wont happen with a good listing agent.

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    First off, this is not the buyer's appraisal but the lender's appraisal that the buyer paid for. If you terminate this deal, the FHA appraisal remains with the property for 120 days

    @Russell Brazil It was changed a few years ago to 120 days and not 180

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    My wife always lets the appraiser in to the homes and has a nice package for them.. just hands it to them... all the pertinent info.. MLS comps private comps if she needs them.. that's what a great agent does.. we have not missed an appraisal in many moons.. only place I have had issues is Texas.. and it was on almost every deal.. so I left Texas to the Texas experts.

  • Investor · Forest Grove, OR · Member since 2016 · 5 posts · 3 votes
    9y

    I sold a rental last year that we listed aggressively at $179k, hoping for $190k or so. It was a one bedroom 700 sq.ft cottage with a full-size lot in a great part of town. Still, the market seemed pretty limited on what this could get. Not 3 years prior I bought my brand new 3 bed 2000 sq.ft home for 250k. Anyways, we got an offer for $230k which we accepted. We had several other offers on the table, but all were about 20-30k less. I was nervous as heck for the two months waiting for the appraisal. My realtor did what she could to help guide him, but it's harder now that they're supposed to be more independent. It ended up working out, getting appraised at offer, but man, it was a tough wait. 

  • Residential Real Estate Agent · Phoenix, AZ · Member since 2016 · 154 posts · 117 votes
    9y

    I always put together a package with comps and neighborhood information for my sellers. Not to try to influence them, mainly to show them how I we came up with the listing price and try to make their job a little easier. From what I've heard, a lot of them are spread thin and some are working areas they are not in often.

    It's tough to get a low appraisal turned around, even when it's an honest mistake because they are essentially telling the bank they screwed up. If your market is hot, you may want to weigh the option of going with the deal vs. going back on the market looking for a conventional buyer.

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