BiggerPockets

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.

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.

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

Thanks alot Mike C :D

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.

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.