OfflineHi everyone. I am learning SO MUCH from the posts here - so thank you all!
This question is about appraisals - they seem to be deal-makers or breakers! I have a *rough* idea of how to figure my own comps from recent sales data stuff that I can get from the courthouse, but I have no way of knowing with those whether the places are beautiful inside, dumps, etc. I also don't know whether or not they appraised higher than the sales price.
So, how can I better estimate what my potential deals will appraise for, and especially how can I estimate the increase in value from renovations?
Also, is it true that I don't get to choose my own appraiser - that the *lender* (aka the mortgage broker) gets to pick, and I only get to pay?? I would understand that the lender will have a list of approved appraisers, but wouldn't I have the option of selecting who I want? It seems to me that the appraiser is one of the most important people on your team!!
THANKS!
Tracey R.
As you deal with more and more properties you'll start getting a better feel of what an appraisal will come in at. Realize that a licensed appraiser is really doing what you are doing, its just that he/she has done it hundreds if not more times than you. ONce you start getting familiar with your target market, appraisals start becoming routine.
Appraisals (depending on the object and method used- residential, income, commercial, etc) rely heavily on comps. If you are getting fairly decent comps from the public record, then you can get pretty close to the appraisal.
You are correct in that you don't know what is on the inside of some of these comps but I think you will find that the appraisals come pretty close to the comp numbers.
Unless you are venturing inside some of the comps then it is all really a guessing game. The appraiser will generally narrow down his comp list to 5 or 6 properties that have general similarities and account and adjust the appraisal for differences.
It is true that you don't get to pick your appraiser. The reason for this is fairly obvious since there is a lot of room for corruption and false appraisals(something that many people have complained about during the boom - since many appraisers were being coerced into hitting the "number" that was needed with the appraisal). Your Lender wants to verify with their own internal people that the appraisal report is legitimate.
You can however pay for your own appraisal if you are just dying to know or you want some basis for comparison but in general you may be wasting money since you'll just have to pay for it again with the lenders appraiser. The lender may have a list of appraisers that you can choose from . Each lender does things differently.
If you are doing FHA, then the appraiser has to be an approved FHA appraiser. (yet another level of complexity).
My suggestion is that you do what you have been doing and don't second guess yourself too much. Choose the closest comps and the ones that match as closely to your target property as possible and you probably will get close to the number every time....
best of luck and hope this helps
Lamont
DREgroup - SF
Thanks! I think we'll do fine, but there are no comps within 30-60 miles, except for when this one got repo'd in September (at $116k) and when it sold in 2006 (at $245k). So, can they use the same property as it's own comp?? What do they do when they don't have comps?
We're still waiting to hear back on the offer. I can't imagine it's that hard to compare two offers and see which one is better! Oh well, they said this guy works on Saturdays, so maybe we will hear tomorrow!
THANK YOU!!
Tracey R.