Any Appraisal Tips?

Question

I’d like to hear from some of the more experienced investors if there are any tips you can share on how to increase the chances of receiving a higher appraisal after the renovations have been done?

I’m not necessarily looking for renovation tips but more so when you are with the appraiser on-site, is there anything that can be said or given to them to better your chances on achieving the number you are looking for?

Thanks!

Anson Young · Answer

Johnny,

Meeting with them and building a bit of rapport helps for sure, but I bring with me some recent comps and a detailed list of every single upgrade that we did to the property. I always just say "not trying to do your job, but these are the valuations that we based the numbers of this project on, these comps in this package. Also, since many upgrades can go unnoticed when this much work has been done to the property, here is a detailed list and cost of what we spent to make the property this awesome"

Let us know how it goes!

Dan Milinazzo · Answer

@Johnny Thompson 100% listen to @Anson Young that is extremely solid advice. Rapport goes a CRAZY long way.  Do not try and approach them as if you are an expert and know the value is higher than it appears.  Go into it humble and ask if there is anything you can collect to help make it easier for them to assess the property.  Appraisals are ALWAYS scrutinized, so some appraisers I have dealt with just seem to be on the defense to start.  Gotta break that wall down.  That will give you the best chance to start on the right foot.  Best of luck.  Save all of your appraisals.  You would be surprised how valuable they can be as you start trying to assess ARV on other properties going forward.  Patterns will start to emerge, like "garages always seem to be worth 5-10k in this market"  Best of luck.

Anson Young · Answer

Thats some great subtle reinforcing of your number while building rapport... they might think of that number while doing the appraisal, and not even know why that popped into their head!   I like it.

Ujwal Velagapudi · Answer

Aside from the things already mentioned, I just subtly dropped in the target appraisal/BPO figure I needed to get approval from a lender. I knew it would appraise for more, but still I wanted to say it a couple of times just so they knew the absolute number that would kill my deal if they for whatever reason did appraise for less. But it wasn't in an aggressive or desperate way, but more in casual conversation as we went through the properties.

Evan Polaski · Answer

@Johnny Thompson, pull your own comps, have before and after pictures, a full list of updates, copies of permits to show prove you are doing it right.  As Steve mentioned, if they were truly independent 3rd parties it would not matter, but at the same type, the opposite of hiding the bodies is true.  Tell them about the "behind the scenes" stuff you did that can influence value too.

Steve Morris · Answer

"I’d like to hear from some of the more experienced investors if there are any tips you can share on how to increase the chances of receiving a higher appraisal after the renovations have been done?"

Well, if they're truly dis-interested 3rd parties giving an independent opinion of value, probably nothing.  I'd make it as clean as possible and put any bodies where they can't be seen.

Appraisers go thru this "see how great my property is" about 80% of the time on visits, so are used to it.

Brandon Allenczy · Answer

@Anson Young my lender had a similar strategy I believe. We're working on getting  our primary residence FHA refinanced into conventional. Originally I told him the ARV would be a lot higher than what a realtor told me (just because I'm a newbie and made a mistake). The lender said he would leave that higher number, and let the appraiser change it after his evaluation. My guess is so that 'higher end' number is in the back of their mind and it subconsciously brings their evaluation up?

Definitely not saying to give a wrong estimate upfront, just an interesting strategy I thought.

Sarah Brown · Answer

I thought I was going to offer some great advice but @Anson Young pretty much nailed it.

Brian Bagdasarian · Answer

To build on what @Dan Milinazzo and @Anson Young have said - I always have a clean list of upgrades and updates that have been done, including systems and "in the wall" items that otherwise would not be apparent. This can become especially important when it comes to older homes that have been rehabbed. I provide it to them, and usually frame it as "here's a list of what we've recently done, and what it cost..."

If they have questions, I answer them, but to the point of the others, I never try to be authoritative, just humble and helpful. It can get you a few thousand extra in a value bump (not always, but sometimes).

Johnny Thompson · Answer

@Anson Young Thank you, great tips!

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