Asking Price Vs Appraiser Price

Real Estate Deal Analysis & Advice
16yFollow

Asking Price Vs Appraiser Price

Cliff Hudson
Real Estate Investor · CA · Member since 2009 · 32 posts · 0 votes

Hi, after I've done my due diligence in that particular area I'm interested in, is it advisable to bring in my own appraiser into the picture before buying the property?

Thanks

0Reply
29 views

12 Replies

Jump to latestLatest
  • James Harkness
    Real Estate Lender · Philadelphia, PA · Member since 2009 · 216 posts · 112 votes
    16y

    If you are going to be getting financing from a bank, they will require an appraisal of the property. They will order the appraisal, and will not consider an appraisal you had done on the property previously in most cases.

    0Reply
  • Cliff Hudson
    OP
    Real Estate Investor · CA · Member since 2009 · 32 posts · 0 votes
    16y
    Originally posted by James Harkness:
    If you are going to be getting financing from a bank, they will require an appraisal of the property. They will order the appraisal, and will not consider an appraisal you had done on the property previously in most cases.
    Hi James, thanks for sharing. I've the intention to get a loan from the bank and looks like the bank will get their own :D

    PS: I know in most case, the bank will hire their own appraiser but I'll be paying for it in order to get the loan.
    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    16y

    Sometimes you can ask the bank for the list of appraisers that they approved for use in their lending, and then you can pick from that list and hire them directly. You instruct that hired appraiser to send report to the lender.

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    16y

    You can still do that with HVCC in effect? I thought the lender had to hire the appraiser directly.

    0Reply
  • Mike C
    Real Estate Investor · OH · Member since 2008 · 194 posts · 89 votes
    16y

    Winstrol,

    Don’t put the cart before the horse IMHO. Work backwards to figure out if a particular property will provide the return you want before putting any money into it. If the numbers of the property (rent, expenses, etc) don’t make financial sense, don’t send good money after bad (i.e. your time in researching the deal). You have said you did your due diligence but if that is the case, you should already know the value and have no need to pay for an independent appraisal. The bank will require an appraisal and you probably won’t have much input into whom they use (separation of church and state, you get the idea) but you should be there when they do the appraisal. If the numbers are good, then move forward with the bank’s appraisal (which you are paying for anyway probably as you say) and assuming the value is there to justify your numbers, close your deal.

    Best of luck

    Mike C

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    16y

    Steve,

    Your statement seems to be inaccurate. You can not ask the bank for their list of appraisers. Most banks don't know them because of the HVCC, its a random selection for the appraiser. If what you are saying is true, this would be a serious legal issue for the bank and I don't know of any banks that are willing to risk that.

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    0Reply
  • Cliff Hudson
    OP
    Real Estate Investor · CA · Member since 2009 · 32 posts · 0 votes
    16y

    Thanks alot Mike C :D

    0Reply
  • Jason S.
    Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
    16y
    Originally posted by Jon Holdman:
    You can still do that with HVCC in effect? I thought the lender had to hire the appraiser directly.



    With conventional financing and HVCC the lender hires the management company who in turn hires the appraiser. If your loan is FHA, the lender still has the option of choosing their appraiser without going through an appraisal management company.
    0Reply
  • Cliff Hudson
    OP
    Real Estate Investor · CA · Member since 2009 · 32 posts · 0 votes
    16y

    If appraiser's valuation is slightly lower than seller's asking price, do we still go for it if that property provides a reasonable positive monthly cashflow compared with the other properties around that area?

    PS: I mean of course all sellers wanna sell at the highest price possible right.

    0Reply
  • Jason S.
    Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
    16y
    Originally posted by Winstrol:
    If appraiser's valuation is slightly lower than seller's asking price, do we still go for it if that property provides a reasonable positive monthly cashflow compared with the other properties around that area?

    PS: I mean of course all sellers wanna sell at the highest price possible right.

    This is where your negotiation skills come into play - this is when it gets fun. Balancing your needs and wants with their needs and wants - the anticipation of who should "blink" - this is where "the deal" is made. Determining the sellers motivations is powerful - what else might the seller need other than "the highest possible price"? - and does that need overpower price?

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    16y
    Originally posted by Winstrol:
    If appraiser's valuation is slightly lower than seller's asking price, do we still go for it if that property provides a reasonable positive monthly cashflow compared with the other properties around that area?

    PS: I mean of course all sellers wanna sell at the highest price possible right.


    IMHO, probably not. I want to be into properties well below their value. That's why I buy REOs and do some fixup. With plenty of properties available, the discount for these messy REOs is much larger than just the work that needs doing. If you're trying to buy properties in decent shape, you still must figure out a way to buy them well under their retail value. If that's what you're doing, and the appraisal is coming below the contract price (I could care less about the asking price, except as an indicator of the likelihood of me being able to buy the property), then you are WAY overpaying. You want to be into the property at least 20-30% or more below its "retail" value.

    If you're buying a REO, short sale or other distressed property, and the appraiser is comparing it to other similar properties, then you might be OK. I have had one REO where the appraisal came in lower than expected and we used that to negotiate the price down. We had offered $77K, expecting the ARV appraisal to come in about $130K. It was actually more like $120K, so we negotiated the price down to $70K.

    0Reply
  • Brian Haskins
    Real Estate Investor · St. Louis, MO · Member since 2008 · 443 posts · 91 votes
    16y

    Not sure what kind of deal your doing here if it’s a retail house or wholesale deal. If your getting a loan they will probably require an appraisal if you don’t get a loan then its up to you. If you aren't familiar with the values and cant run your own comps then yes it may be a good idea.

    Brian Haskins

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free