Buying & Selling Houses

Best Deal Ever Show #8: Appealed Appraisal Adds $115K to Property Value

Expertise: Real Estate Investing Basics, Landlording & Rental Properties, Real Estate News & Commentary, Mortgages & Creative Financing, Real Estate Wholesaling, Personal Development, Flipping Houses, Business Management
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Andresa Guidelli moved from Brazil to Philadelphia in 2008. It was a big adjustment. It seems someone neglected to tell her that despite the show’s title, it is not always sunny in Philadelphia—especially in January. However, she has figured out how to not only survive the cold but also thrive in the City of Brotherly Love!

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As many others who listen to the BiggerPockets Podcast can attest, Rich Dad Poor Dad (RDPD) has had a profound impact on so many people. Andresa counts herself as one of the fold. After reading RDPD, Andresa became very interested in real estate and eventually started attending some of the courses that Rich Dad had available. And to paraphrase her: the rest is history.

How an Appealed Appraisal Amounted to an Additional $100K+ in Value

Andresa started out with single family doing rehabs and transitioned into new construction. Eventually, she ended up doing short- and long-term rentals, which is how we arrive at her best deal ever.

Finding the Deal

While inspecting one of her projects, Andresa noticed some trash bags and furniture at a nearby building, which led her to believe that something was up with the property. Since Andresa started her sales career going door to door, she has built up some thick skin and decided to go knock on a few more doors to get information about the property.

Related: Best Deal Ever Show #6: Using FHA to House Hack

She was able to find out from neighbors that the property was an estate sale that was going through probate, so she reached out to the executor for more info—and ultimately made an offer to purchase.

Financing the Deal

She ended up purchasing for $230,000, putting another $200,000 in for the renovation. She financed the deal with short-term financing for 80 percent of the purchase and 100 percent of the renovation.

Once renovations were complete and the property was stabilized, Andresa decided to put long-term debt on the property, which involved getting the property appraised. When she received the appraisal, it valued the property at $560,000, meaning that she had created $130,000 in equity.

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Knowing Her Stuff—and Proving It

Most investors would be ecstatic with that news! But not Andresa. She had done her research before buying and felt confident that the property should be valued higher.

Andresa decided to dig into the appraisal and ended up finding a few key items:

  1. The comps that were being used were all zoned for single family and hers was a triplex, so the zoning was off.
  2. The properties that were being evaluated using the rents were using estimated rent values and not actual.
  3. Several properties were too far away from the subject property to be considered a comp.

Related: Best Deal Ever Show #7: Infinite ROI Through Owner Financing

One of my favorite sayings is, “You are the only one saying no until you ask.”

And apparently Andresa subscribes to that thinking, as well! She took her findings to the lender to see if they would increase the value. They told her that she was going to have to get the appraiser to sign off—and that is just what she did.

She took her findings and made her case for an increased value, eventually receiving notice back that they had appraised it for $675,000.

A little research and a lot of gumption resulted in a $115,000 increase in value!

Moral of the story: don’t be afraid to ask. You just might leave $115,000 on the table.

Have you ever received an appraisal you thought came up short? Did you contest it?

Share your experience in the comment section.

Ken Corsini G+ is the host of the Deal Farm Podcast (on iTunes) and has 10 years of full-time real estate investing experience...
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    Chaim K. from Brooklyn, New York
    Replied about 2 months ago
    Thanks Ken for sharing this absolutely amazing story! I wish I can learn more (without formal training) about the appraisal process and methodology so I'm not in the dark until I get the report back from the appraiser.
    Roger Laty
    Replied about 2 months ago
    I had the same happen to me and was told that the appraisers are hired by the bank and cannot talk to me. I appealed to the bank who was not successful in getting the appraiser to even reevaluate. I thought they were clearly wrong and presented valid reasons that went nowhere. Appraisers work for the bank and are in no way incentivized or encouraged to get to a full value on a refi. A few weeks later a similar property to mine sold for $200K more than my appraisal and nobody cared. My experience is that appraisers are simply not held accountable and the bank penalizes them if they later increase a value because it proves they made mistakes.
    Russell Wagner
    Replied about 2 months ago
    Great story, I really like this for you all and Roger Laty were able to get the valuation up. Throwing this out there how do you lower your appeal/appraisal to the county? Do you all use an attorney or DIY - I get the increased appraisal for banking, but the lowering for taxes. We are a startup out of Atlanta with taxfence.com and plan to expand to the BP community.