Hello @Eric Haug -- Welcome to BiggerPockets.
I see you've connected with Jennifer at our office. You're in great hands with her as your Investment Counselor, as well as the rest of our team.
There are many threads here on BP on our company, including this one:
We insist that ALL our investor clients order inspections and appraisals.
INSPECTIONS: In some cases our properties include third-party inspections that you will receive as part of your due diligence. However, you're always welcome to order another one from any inspector you choose.
APPRAISALS: You will need to order an appraisal if you're financing your investment. Lenders require them through third-party appraisal networks.
Should an appraisal come in lower than the purchase price, which happens about 10% of the time, there are a few options:
- If it's only a small difference you can accept it, or we will work with you to negotiate a fair compromise.
- If it's a large difference, which happens once in a while, often by a lazy/bad appraiser, we will have a full list of comparables pulled to compare the comps used by the appraiser, and appeal it if necessary.
- Lastly, a new appraisal can be ordered if the first one was clearly wrong because of gross incompetence, etc.
Feel free to contact Jennifer with any specific questions, or post in the thread with other general questions.
Originally posted by @Eric Haug :
Does anyone have first hand experience working with them? Looking to buy my first property in the next few months and am looking to go the turnkey route at first.
Also if you get a turnkey inspected and appraised and it comes back lower than what they are asking for it do most providers lower the price or is that extra cost just considered the convenience factor for having a renovated and ready to go property?
Never good when a property doesn't appraise. Generally you shouldn't pay more than the appraised price for a home but not all appraisals are created equal. Many people put appraisers on this pedestal of expertise. Just not the case. Many of them are lost. I know in the Cleveland market I get 4 or 5 calls per month from appraisers who need help coming up with the value on a garden sized apartment building or multi family property. (I'm #1 seller of that stuff in the county Cleveland is in. I am a walking comp)
What you can do when it appraises low is 1st ask the seller to reduce the price to the appraised price. many will. If that doesn't pan out challenging the appraisal is possible. If that happens I would try to push any additional cost of the appraisal challenge on the seller, that may or may not work. If you get two low appraisals odds are good that's probably the true value. One super high & one low you know your 1st appraisal was a dud because you, the seller & now an independent appraiser all see one value while some other schmuck appraiser sees a lower one.
I respect Mr. Santarelli for the time invested in his podcast; if you listen start to finish you'll basically have everything you need to know about turnkey investing. However that should be balanced with the many threads on bigger pockets forums warning of the pitfalls of turnkey investing.
Thanks for this info, Marco. I am in the same boat and confused with the Price on norada website versus the estimates on Redfin, remax and Zillow
Hi @Sagar S. — you might have answered your own question. What you see on Zillow, Remax, and Redfin are exactly that — estimates. What we post on the site are the fair market value, or sometimes a price below market value. They are based on comparable sales, and would be what an appraiser would use if you were to finance the purchase.
It is most peoples experience that those AVMs (automated valuation models) are fairly inaccurate. It would be a mistake to rely on them, and no appraiser or lender would ever use them for an appraisal. Hope that helps.
I am a fan of turnkey and have worked with Norada with very good results so far. Of my two out of state turnkeys, one of my appraisals came in about the same as buying price and one came in $12k higher which was a plus. For me a big selling point is having the property management in place. I have four units locally and finding a half decent pm to turn them over to was a *****.
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