Hi all, working on closing a property currently. I originally went into the deal with thought I was buying under asking so I'd have some equity in the property in addition to the down payment in addition to cash flow. I made my original estimates with comps, calculating both sale comps as well as rental property comps with guidance from my realtor. About a week away from closing, and just had the appraisal come in , and it is just slightly above the renegotiated price after due diligence and negotiations. With this figure being lower than what I originally ran my numbers with when making my offer and moving forward, the deal doesn't look as attractive given the lower amount of equity. Anyone with experience with this? Moving forward, any pearls anyone learned about so as to not over value the property like I did when running my original numbers?
Where did you get your comps from? How confident are you in them?
If you have true, apples to apples comparables from the MLS, I'd recommend you request a copy of the appraisal, and explain to the appraiser why it should be higher and ask him to reconsider. If he won't budge, request another appraiser. If that won't work you can order another appraisal from a different company.
All that being said, of course there's no guarantee anything will change. But if your property financials are worrying you enough it may be worth a shot.
Keep in mind appraisals are not done by algorithms but by humans and you could get a different number from 3 different appraisers. I have found if they know what you are paying (and the mortgage company often tells them) then they come in just a little above that total so the people who are selling don’t feel like they were ripped off and the person buying feels like they have a little equity already. Also, the appraised value can change in the month or two it takes to close. You are in the middle of winter, appraisal values are often lower.
@Patrick Ng appraisals usually come in right at the contract price or below, if you had one come in above the contract price you likely snagged a pretty good deal.
@Lawrence Rutkowski I got the comps from MLS/realtor and used what I thought was the most comparable properties.
Thank you all for your insight/ responses.
I have a another question I was hoping you all could weigh in on. One of a SFH that has been rented for about 8 months in SA is under property management. In the lease we signed, the standard Texas Pet Addendum, we agreed upon section B3: "Tenant will, upon execution of this agreement, pay Landlord $ XXX as a one-time, non-refundable payment."
I touched base with my property manager because I did not receive this pet fee, and they are stating that the fee stays with the property management company, despite me quoting the agreement.
Does anyone have any experience or suggestions on how to deal with this? If anyone recommends contacting an attorney, anyone have any contacts for folks in the San Antonio market? I'd like to avoid that if possible as I anticipate the attorney fee would cancel out the pet fee anyway, but I also think the company is not executing this contract as it was agreed upon.
@Patrick Ng different property mgmt companies have different fee structures. Shoot me a message and I can send you info for some other property managers we use and you can ask them what they do. I know some companies collect and keep fees.
@Patrick Ng . My experience (28+ years) is if the Appraisal Value is Contract Price or just minimally lower (Appraisers do Know what Contract Price is) the Appraised Value will be the Contract Price. If the Appraisal Value is over Contract Price, the Appraisal will be Contract Price PLUS about $2K, as Appraiser is only asked to justify lender is making a good decision on the Loan. Furthermore, if Appraisal came in Significantly More (Value Judgement) than Contract Price, the Appraiser may have questions to answer from the Lender.
Keep in mind - Appraisal are done by Humans. IMO, if you sent 3 different Appraiser to the Property - you'll get three different Values. Ideally they are very close - but will each be different.
@Jim Cummings Hi Jim, thank you for the insight, makes sense why that would happen. Appreciate the help/ insight.
At this point there would be no justification to request an appeal or hire a new appraiser. A new appraiser would cost you an additional fee. As an appraiser, if someone asked me to reevaluate an analysis that met contract parameters, I'd consider it was a waste of time. Keep in mind the appraiser does need to take into consideration offer information. What is the current buyer willing to pay for the property? My assumption there was not a bidding war and you were the only offer? If the property has been on the market for a while, experienced any decreases in list price, it is rare that it would be valued over asking. Coming in above contract price is a win.
I am not so experienced in the contracts of property management. I just happen to have had my real estate license in several states & was trained to do my comparable sales from the man who makes the classes appraiser’s take to get their license. I will defer to Tim for this situation.
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