Flipping 1st property! Will getting a home appraisal help ?

Question

Good afternoon Kevin a Phoenix Arizona resident. Currently working with a private investor. Project rehabbing distressed investment property’s. I’m currently working on my 1st project .

Goal to get the (MOA) what’s the best process to get the home assessed at the (MOA)

-QUESTION: can you pick Who appraises the property? How could a (licensed appraiser

)harm or benefit the project.

Odie Ayaga · Answer

@Kevin Garcia you really should be putting in the time and research necessary to be able to evaluate how much a given property will be worth given certain repairs once their complete for yourself and not have someone tell you. You're the only one in the transaction who doesn't have a motive to tell you something that may not be accurate. You shouldn't rely on agents or contractors for that. You can certainly consult an agent to check your math if you know and trust them, but you should be providing the scope of work to your contractors so they can tell you how much it will cost, not vice versa. All lenders will typically want an appraisal to ensure the property is at least worth what you're purchasing it for. Hard money lenders will typically want to use an appraiser that can determine that it will be worth what you say it will once complete. It's not mandatory to be present when they come out to the property, but then you're at the mercy of whatever they decide the property is worth. Giving them the data you used to arrive at your purchase price and ARV can make their job easier as they can verify your info rather than start from scratch, but it's no guarantee they'll agree with your assessment either. There are a lot of uncertainties in real estate and particularly in flipping. The more you know about all of them, the better prepared you can be, but even the most experienced flippers have horror stories too.

Ryan Swan · Answer

@Kevin Garcia when your flipped property is under contract with a potential buyer, it will be appraised by an appraiser of the buyer's lender's choosing. Meet the appraiser at the property and provide a list of major updates you made to the property, along with any comps or extra information that help justify the sale price.

Craig Jeppesen · Answer

You will not be doing an appraisal. That is for the buyers and their lender. You need to do your own research before you buy a flip to determine the ARV and use that to make your offer on the property. Your repairs won’t really affect ARV as much as you think. Age, sf, number beds and baths and garages and area affect ARV. Your updating will mainly just make it more modern looking so you will have a nicer property for the area and sf etc bringing you more buyers but they won’t pay more than market.

Ryan Swan · Answer

Not a bother at all, that's what the forums are for. A list of major improvements and costs to the property...you should know this information with or without the contractor. Things like all new flooring, new kitchen, new bathrooms, new HVAC, new windows, etc...anything you did that significantly increased the value of the property.

Odie Ayaga · Answer

And just to add on to what @Ryan Swan said, the docs you would really be looking to get for contractors are any type of work or guarantees that carry with the work such as warranties, renewable contracts etc

Ryan Swan · Answer

No, most HMLs don't do a formal appraisal on the up front side, they simply rely on their own analysis and price opinion to underwrite the loan. Traditional lenders use a formal third party appraiser. It's not mandatory you meet them there, it's just helpful especially if you're trying to hit a higher sale price than the immediate neighborhood has had before. You lost me with your last question...why would the contractors be verifying the property value?

Will Barnard · Answer

On the resale side, the buyer’s lender is picking the appraiser not you the seller. On your purchase, an appraisal doesn’t help you and unless your hard money lender requires one, one is not needed. If the HML requires one, they will be selecting the appraiser, not you.

Brian Pulaski · Answer

You can’t choose an appraiser for the buyer when you go to sells you can when you buy if you have a private investor and they don’t have any issue with that. At the end of the day appraisals are very subjective and personally I would trust my own ARV verse what an appraiser says.

Kevin Garcia · Answer

@Ryan Swan@odie Ayaga ￼ What is your recommending software to run comps. So many investors and agents working off the MLS what would be a powerful source of software to compete with other investors in the market . Any personal experience or recommended software I would love to hear any advice.Thank you BP community ￼

Kevin Garcia · Answer

@Ryan Swan don’t mean to be a headache.Question: having all the renovations of the property done by contractors what kind of documentation should I receive from their company after all renovation is complete?I understand that this information could be vital information to provide the appraiser with as well other data like permits , comps etc............ if you made a basic checklist . What would your gathered data template look like when providing the appraiser a list of major repair done to the property.Thanks BP Community!!!￼