What are your favorite tips to influence an appraiser/appraiser?

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What are your favorite tips to influence an appraiser/appraiser?

Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

The title is supposed to read an appraisal/appraiser.

Hey everybody, have you ever bought a property, ran the numbers, and figured out what your cash on cash return should be, or what your profit should be on a flip?  Then, the appraisal comes back $20,000 or $30,000 (or even more) lower than expected according to what the sales comparables show?

If you know how frustrating it can be to have an appraisal come in low, then you’ve probably tried to figure house something you could do to change or influence it in some way. What have you come up with or what have you done in the past, or what do you do now, in order to influence an appraiser to give you a beneficial appraisal?

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y

A bottle of Disaronno.  That's not for the appraiser, that's for me after a low appraisal comes in.

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    4y

    A bottle of Disaronno.  That's not for the appraiser, that's for me after a low appraisal comes in.

    16Reply
  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Joe Villeneuve clever answer Joe, but seriously, what do you do or what have you done to influence the value of an appraisal?

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  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    @Shiloh Lundahl if ever there were an industry where looks matter its the appraisal industry.   They can't see how much work you did behind the walls with framing, quality insulation, updated electrical, super quality craftsmanship on the plumbing.. it matters that you have updated mechanicals and they will quantify it but... what really matters is the quality if your finishing work.  Did you do the tile back splash in the kitchen?  Did you ship lap the walls on the three season porch or drywall?  Did your tile in the bathroom cover the entire shower, or did you stop short?   Not to mention the design matters.  If  you had quality finishing work but, picked dated and dark looking finishes I have seen them influence an appraisal.  You need bright, light, happy looking homes and apartments.  

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  • Shiloh LundahlPro Member
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    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Matthew Irish-Jones Thanks so much for your post.  I absolutely agree with you that looks indeed matter.  But I am going to pose it in a different way.  What we have found is that appraisers are highly influenced by they way properties are purchased over the finishes that are chosen.  For example, if I buy a property from a wholesaler at a discounted amount, say 100k and the property needs 20k in repairs, and the property should be worth 150k when finished, if I buy it for 100k and only put 20k into the repairs in a short period of time, we have seen appraisers appraise the property lower than it should be appraised for simply because we bought it at a good deal.  To combat this, we buy the properties and include a rehab credit up to the market value so that the appraiser doesn't see that we got it for under market value.  This has been what I have seen influence the appraiser more than the specific finishes we use.  Have you ever done anything like this before?

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    4y
    Originally posted by @Shiloh Lundahl:

    @Matthew Irish-Jones Thanks so much for your post.  I absolutely agree with you that looks indeed matter.  But I am going to pose it in a different way.  What we have found is that appraisers are highly influenced by they way properties are purchased over the finishes that are chosen.  For example, if I buy a property from a wholesaler at a discounted amount, say 100k and the property needs 20k in repairs, and the property should be worth 150k when finished, if I buy it for 100k and only put 20k into the repairs in a short period of time, we have seen appraisers appraise the property lower than it should be appraised for simply because we bought it at a good deal.  To combat this, we buy the properties and include a rehab credit up to the market value so that the appraiser doesn't see that we got it for under market value.  This has been what I have seen influence the appraiser more than the specific finishes we use.  Have you ever done anything like this before?

     Before I read this answer of yours, my answer was going to be two things:

    1 - Tell the bank not to send out an appraiser from a different planet or I won't let them in the house.  Send one local to the property.  It works. I find the "space travellers" are unfamiliar with the area, and they are starting off upset (edit note:  spell checker must have changed the spelling I used from "Pis***" to "upset") because they had to travel so far from home base...and mentally that already sets their calculater up automatically multiplying every number by 90%.

    2 - "Be prepared with comps that favor what I need the numbers to be for after I got a low appraisal".  In other words, "fake a punt".

    Then I saw your answer above, and changed my answer to yours...although I'll think about this some more.  One of the reasons why I don't really have one ready is I try to avoid Bank Financing as much as I can...and this is one of the reasons why.  My focus is on different forms of Seller Financing, and to combat the high appraisal, when I'm the buyer, I provide a detailed Sold Comp Analysis to try to avoid the Seller needing to get their own Appraisal.  

    It works most of the time.  When it doesn't, and the Seller gets a high appraisal, I walk away.  I make very good offers to the Seller, so they usually come back and agree to the original price (or less).  I don't deal with Appraisals when I'm selling because of the way I sell.

    As you can see, I've never really been able to figure out how to influence appraisers.  No two see the same things, not two come to the same conclusions, even though if you asked them they will all tell you that they do.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Originally posted by @Shiloh Lundahl:

    @Matthew Irish-Jones Thanks so much for your post.  I absolutely agree with you that looks indeed matter.  But I am going to pose it in a different way.  What we have found is that appraisers are highly influenced by they way properties are purchased over the finishes that are chosen.  For example, if I buy a property from a wholesaler at a discounted amount, say 100k and the property needs 20k in repairs, and the property should be worth 150k when finished, if I buy it for 100k and only put 20k into the repairs in a short period of time, we have seen appraisers appraise the property lower than it should be appraised for simply because we bought it at a good deal.  To combat this, we buy the properties and include a rehab credit up to the market value so that the appraiser doesn't see that we got it for under market value.  This has been what I have seen influence the appraiser more than the specific finishes we use.  Have you ever done anything like this before?

    I had this happen in Texas on every flip i funded there appraisals always below what we sold it for.. so I left the state not to mention tax's were a killer.. WE did very nice work and better than most I would think.. of course these are first time buyers.  what was happening is the values were rising faster than the appraiser were willing to go up to.  Now here in Oregon and in Charleston we have had zero problems with excessive appreciation..  IE selling the exact same floor plan 10 months later for 100k more..   Might be tougher on you guys who do the rental refi game ?

    But Ms. Lori does a nice package when she is representing a buyer ( again retail) for the appraiser she will pull comps and do a big lists of the nice parts of the houses and quailty etc etc. and she presents that to them.. she might even meet them there to talk them through the house.. thats what I see her doing and she has been doing it for 30 years so I guess it works.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    4y

    Share with them upfront before they do the appraisal the comps you want them to use....if they are in fact comps and understand what they use for comps.

    You should not be able to influence the appraisal or appraiser, but everyone is busy these days.  If you make things easy of them I think their chances are better.  

    Also make the home look like you did when you were trying to attract buyers....lights on, blinds open, no pets, easy access, etc.

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  • Bob Metry
    Member since 2020 · 62 posts · 46 votes
    4y

    @Shiloh Lundahl I usually meet the appraiser at the property and explain all the improvements. I also provide them with a folder with the agreement of sale (at least the page with the sales price) and copies of comparable sales with key data points highlighted such as price, date sold, sqft, etc.

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  • Kami Carlson
    Real Estate Agent · Ashland, OR · Member since 2014 · 13 posts · 7 votes
    4y

    I give the appraiser a list of every added value improvement made and include before/after photos. Your appraiser can’t possibly know everything you’ve improved just by the visual inspection. A list with photos gives them something to refer back to when they start working up the numbers.

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  • Shane Littrell
    Member since 2018 · 7 posts · 21 votes
    4y

    Try to prevent the appraiser from seeing the contract. The contract acts like a floor and a ceiling in my area. You can bring in three different appraisers blind on the same property and price will fluctuate by tens of thousands, give them the contract and they all will line up to contract price. It’s frustrating when you lock up a great deal as I did recently.

    I learned when the price gets dropped during negotiations put it in the contract as a seller credit. This keeps the contract price at market and the seller walks away with the same amount of money.

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  • Shiloh LundahlPro Member
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    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Shane Littrell, I agree with you.  It is so much better to get a seller credit rather than a discount.  Otherwise appraisers tend to give a lower appraisal as compared to when the property closes at a higher amount.  I have made a couple of videos about this on my YouTube channel about this very thing because it happens all the time.

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  • Shiloh LundahlPro Member
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    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Kami Carlson I love the idea of providing the before and after pictures.  And that made me think about the benefit of also adding pictures of any major work that isn't visible such as replacing the plumbing or roof.  Thanks so much for your comment.

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  • Shiloh LundahlPro Member
    OP
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Jay Hinrichs Thanks Jay for your input.  I have seen appraisers come in with low appraisals all the time which then negatively effects the seller.  So, in order to combat this, over the past few years, we started buying properties below market value from wholesalers but then we add huge rehab credits in order to bring the sales price up to market value.  Then we rehab the property and the appraisal comes in at or just a little higher than what we bought the property for.  This has been the most effective things we have done to ensure the appraisals come in at market value and not below. Here is one of my settlement statements from a recent property I purchased.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Originally posted by @Shiloh Lundahl:

    @Jay Hinrichs Thanks Jay for your input.  I have seen appraisers come in with low appraisals all the time which then negatively effects the seller.  So, in order to combat this, over the past few years, we started buying properties below market value from wholesalers but then we add huge rehab credits in order to bring the sales price up to market value.  Then we rehab the property and the appraisal comes in at or just a little higher than what we bought the property for.  This has been the most effective things we have done to ensure the appraisals come in at market value and not below. Here is one of my settlement statements from a recent property I purchased.

    well thats easy enough lets chat next week about this.. my clients could use this I think as more of my clients are refinancing and building portfolios these days then flipping. and for sure the BRRRR is a challenge for them getting values where they want them IE total OPM which is my companies service to my clients.

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  • Shiloh LundahlPro Member
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    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Jay Hinrichs I will send you a link to a couple of videos on my YouTube channel where I go into adding rehab credits to the settlement statement.  

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Originally posted by @Shiloh Lundahl:

    @Jay Hinrichs I will send you a link to a couple of videos on my YouTube channel where I go into adding rehab credits to the settlement statement.  

    cool thanks I wonder though if the refi lenders can basically see right through this ? I am not on that side of the table so I really dont know what they ask for IE do they want to see the HUD when you purchased or are they simply relying on appraisal and current title report.

    now that 60k was just vapor right there is no cash .. in my deals I actually fund the rehab money and can put it on the HUD and then give out as draws like we normally do. I suspect giving the appraiser your scope of work does the same.

    I just did two payoffs for one of my clients both payoffs to me which was purchase rehab and my fee's came to about 90k and the loans they are doing the lender told me are 105k and values were 150k typical rate term refi as we have done thousand times.. ITs just harder and harder to find these spreads but it does happen.. But if I can help my clients perfect their BRRR and own the assets ( which I have no desire to do of course) then it grows our funding line. I mean i started my career doing BRRRR for investors in Detroit of all places back in 2002 this was how ALL turnkey was done.. TURN KEY was not a fully rehabbed and rented house it was all BRRRR so the buyer got either cash back at the end or no cash into the deal and positive cash flow.. Now I understand why the borrowers like this but it did lead to many not having enough TRUE equity and DSCR to withstand a down turn so there is that .

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  • Seth Hochberg
    Member since 2020 · 120 posts · 135 votes
    4y

    I've only done one BRRRR, and got wrecked by a low appraisal. The appraiser called me and I realized afterwards, that I was completely unprepared for that conversation. You should be prepared before that conversation to say exactly what was done (obvious hint: bathrooms + kitchen matter more than anything). I talked with an experienced investor friend of mine and he suggested to exaggerate the rehab costs. I don't know how ethical that is, but it was an interesting suggestion. I do feel my appraiser simply added the the purchase + rehab costs and found comps that verified that total.

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  • Tristan Gardner
    Rental Property Investor · Mansfield, OH · Member since 2021 · 129 posts · 89 votes
    4y

    I've created a great relationship with my lender and ask that he use the same (more generous) appraiser each time. The appraisal company happens to be small and only has a couple of staff that alternate. A little bit of charm with them has gone a long way

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  • Alicia MarksPro Member
    Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
    4y
    Quote from @Bruce Lynn:

    Share with them upfront before they do the appraisal the comps you want them to use....if they are in fact comps and understand what they use for comps.

    You should not be able to influence the appraisal or appraiser, but everyone is busy these days.  If you make things easy of them I think their chances are better.  

    Also make the home look like you did when you were trying to attract buyers....lights on, blinds open, no pets, easy access, etc.


    I spoon fed comps for a refi I completed last month, but they refused to use them because they were off market turnkey. They would only use MLS. Lack of inventory meant they went past 6 months and beyond 1 mile to make it "fit" and ultimately I lost out on about $25k I should have been able to pull from the property when compared to other turnkey owners that had done the same. I tried to reason with them that a property is worth what someone will pay, not what they will only pay on MLS. I had 5 comps with the same team finishing out in a 1 mile radius and they used none of them. My fault that I was cash strapped and needing to start my next project, so I had to suck it up. Won't repeat that mistake again.

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  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    4y

    I had to get Another appraisal on a property I was refinancing in order for it to go through. Most of my appraisals other than the one mention above or somewhere in the ballpark Within $10-$15,000 of what I was thinking. The one that was extremely low was where the contractor left all kinds of debris in the yard and the property manager did not have the house properly cleaned before the appraiser got there. I do believe that had something to do with the appraisal. But the main issue with the appraisal is they said it would only rent  for 1175. We rented it for 1595 and that was below market. It was the projected  rent that caused us to have to get another appraisal.

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  • Derrick E.
    Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
    4y

    I will be cashing out two homes in the next two months. I will give the appraiser a portfolio. It will include comps that my realtor provided. It will have before photos, rehab photos, and after photos of everything we did. It will also have a cost break down of all the work we did to the house so they full understand and appreciate all the work done. Does it help? I think so, but who knows. At the very least I know I did all that I could. 

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  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    4y

    I think J Scott Did a thread on something like this a number of years back. There was an appraiser or two that jointed the conversation And it got very interesting a time or two.

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  • Adeva Edobor
    Banker · Huntington Beach, CA · Member since 2018 · 99 posts · 100 votes
    4y

    @Shiloh Lundahl When covid started, a lot of appraisals were done remotely i.e. the appraisers never showed up. They just looked at comps and threw numbers out there. Some asked the home owners to send them pictures. I know a home owner who was asked to send pictures; they sent awesome pictures, sketched a layout of the property with dimensions to help the appraiser understand the layout and even sent some comps. (Basically doing the appraiser's job for them) Can you guess if the valuation was favorable?

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  • Wendy ThurstPro Member
    Nashville, TN (nashville tn) · Member since 2020 · 49 posts · 28 votes
    4y

    @Kami Carlson

    I provide a detailed list of improvements as well, it works for me every time. Write it up like a one page ad.

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  • Shiloh LundahlPro Member
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    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    4y

    @Jay Hinrichs You would think that they would be able to look right through it, but in my experience they don't. Most of the time they don't ask me for the previous settlement statement or HUD. But even when they do, the people looking at the settlement statement doesn't pay much attention to the rehab credit. They just look at what it closes at and what the appraisal comes in at. And the appraiser often just looks at what it was purchased at and never asks for the settlement statement. We have been doing this for the past 2 years and whenever we use this technique, things work out really well for us with the appraisal, and whenever we don't, the appraisal comes in low. So I would say this technique has been the most powerful technique that we use to influence the appraiser. And I t works consistently.

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