Do you do appraisal before or after offer?

Question

Hello all

I have a property that I am thinking to do BRRRR

In order to find out estimated after repair value, do you usually get an pre apprasal before or after an accepted offer?

Thank you

Account Closed · Answer

Hey @Juyoung Cho.  Im an investor and mortgagre broker in Halifax, NS.  I always estimate my ARV with market comps and if its multifamily (5+ unit) I use a mix of comps + income approach.

I read through some comments and sounds like some US investors do things a bit differently there.  For my investments (in halifax), if i find a property that looks like there is potential based on my numbers, I will get it under contract, then have as "AS-IS" and "AS-COMPLETE" appraisal done.  The as-is will be needed for the bank, and the as-complete will give you a more confident ARV to base your refi off of.  We typically dont move forward with the project if the as-complete appraisal does not come in where we need it to be.

Note: Not many brokerages work this way.  I work with an investor focused brokerage that specializes in these types of project.

Last note, I've found the income approach is quite strict in the US, however at least in halifax, appraisers use a balance of income, comparable and cost approach.  Our financing in Canada is much much more strict than US...

Hope this help.  If you have more questions feel free to DM me

Tim Delaney · Answer

@Juyoung Cho an appraisal won’t necessarily give you a future ARV, it is usually an as is valuation. You could talk to the appraiser and share your plans with them and they may give you an estimated future value, but it won’t be guaranteed. Personally I rely on my real estate agent to help determine the ARV before making an offer.

It would get far too costly to have an appraisal done on every property I look at before even making an offer.

Eliott Elias · Answer

Your lender requires an appraisal after you go under contract. You should know what the ARV is given comparables in the area prior.

Carlos Ptriawan · Answer

I read the inspection report and go from there. If I like it I bring my contractor to the house. Anyway since the cost to rehab is the same I only need to read property inspection report.

Kenneth Garrett · Answer

@Juyoung Cho

Generally you would analyze and create the ARV (after repair value).  This can be done through a realtor or for me I would do them myself.  I would use Zillow, Redfin, trulia sites to gather the information needed.  I see you’re in Nova Scotia, not sure what free sites you have there.  It’s too costly to hire an appraiser unless you have a friend who is helping you out.  No fee.