Appraisal higher than purchase price

Starting Out
9yFollow

Appraisal higher than purchase price

Laramie Hiebner
Lincoln, NE · Member since 2017 · 56 posts · 4 votes
So I'm buying my first triplex. We negotiated down to $105,000. And we are a few days out from closing and it got appraised at $117,000. What does that exactly mean because the bank told us that means instant equity. Does this mean I could turn around and sell it for $117,000? What are some thoughts?
0Reply
22 views

Most Popular Reply

JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
9y

No thoughts. The number is meaningless right now. It means you're not getting screwed in the deal. A $12k spread between purchase and appraisal is no big deal. If you closed and turned around and sold it for $117 tomorrow, you'd break even. 

Podcast Guest on Show #243
Skyline Properties
View Page
2Reply
See this reply in the discussion

7 Replies

Jump to latestLatest
  • Tyler Ansell
    Investor · Tampa, FL · Member since 2015 · 293 posts · 175 votes
    9y

    Theoretically yes. Your closing costs would almost immediately destroy that "gain" though.

    1Reply
  • Laramie Hiebner
    OP
    Lincoln, NE · Member since 2017 · 56 posts · 4 votes
    9y
    Tyler Ansell we asked them to pay the closing costs
    0Reply
  • Tyler Ansell
    Investor · Tampa, FL · Member since 2015 · 293 posts · 175 votes
    9y

    Well yeah, but you'll incur costs if you were to turn and try to sell it. Seller pays closing costs associated with transaction as well as buyer.

    1Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y

    No thoughts. The number is meaningless right now. It means you're not getting screwed in the deal. A $12k spread between purchase and appraisal is no big deal. If you closed and turned around and sold it for $117 tomorrow, you'd break even. 

    Podcast Guest on Show #243
    Skyline Properties
    View Page
    2Reply
  • Chris T.
    Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes
    9y

    congratulations @Laramie Hiebner

    Appraised value is an estimated value of the property. You could list the unit on the market for $117K, assuming someone buys at that price. Even then, the new buyer is going to negotiate and after other closing costs, you might be lucky to break even.

    But if you're going the BRRRR route, you would be able to pull more $ out of the property using the appraised value.

    0Reply
  • Laramie Hiebner
    OP
    Lincoln, NE · Member since 2017 · 56 posts · 4 votes
    9y
    Chris T. Can I use brrrr even if I haven't closed yet? How would that work for my situation what would the profit look like
    0Reply
  • Chris T.
    Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes
    9y

    @Laramie Hiebner

    No, you cannot refinance the property before you actually close on it. A lot of lenders may require seasoning for 6 months, in order to cash out at ARV.

    What is your profit? it all depends on your other numbers. 

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