Appraisal from a hard money lender

3 Replies

To get a hard money loan, do they send out their own appraiser to get the ARV before they will lend you the money on the house you want to fix and flip?

@Robert Gunby

Larger outfits will send out an appraiser. The appraiser will have to adjust for the planned renovations being done - "subject to repairs."

@Robert Gunby A HML will rarely give you an appraisal that is as high as you think it should be. Just be prepared for their "appraisal" to be a disappointment.

By the line - "their own appraiser", I would think one of two things is happening. 

1. They (local) are walking the property and estimating the value based on what they see, in a market where they are comfortable lending.

2. They are contacting a non-affiliated third party appraisal (that they may have done business with in the past) to appraise the property officially.

Both scenarios are generally true for your question. Some lenders don't require an official appraisal and that would be scenario #1, but they are still looking at the property and determining the value after the repairs. If scenario #2 and the appraisal is a disappointment, then you may have to put up more money in the deal and really believe the value that you estimated carefully.

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