Private Lending & Conventional Mortgage Advice

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Joshua Zdunich
  • San Diego
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Refinance Appraisal Question

Joshua Zdunich
  • San Diego
Posted May 31 2022, 09:02

Hello,

I closed on a cash purchase on 5/25 in La Jolla CA. I already have my refinance lined up and ready to go but I might have made a mistake with the appraisal and this is where I need help. So this property is going to be a complete gut remodel, with an ADU addition. After closing I was really excited and wanted some answers about the existing build so I opened up(tore out drywall) on two closets and a hallway. This is all before the refinance appraisal <----- I know, rookie move. So to all the appraisers out there, Is it ok to have those studs showing or do I need to drywall what I opened up? The house is a 5bd, 3.5ba, 2400sqft, 3 story, the demo was in the bottom floor.

Thanks in advance for all the help, my appraisal is scheduled on Friday.  

San Diego, California

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Zachary Inman
  • Specialist
  • Indianapolis, IN
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Zachary Inman
  • Specialist
  • Indianapolis, IN
Replied May 31 2022, 09:39

Get the drywall up asap. When the appraiser comes by, you want the property looking its absolute best, or else you risk it coming lower than what it would be otherwise.

Maybe the appraiser won't dock it for not having drywall up. Maybe they will. Appraisers are subjective, even if they want you to think they aren't. 

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Kevin Post
  • Lender
  • Dallas, Tx
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Kevin Post
  • Lender
  • Dallas, Tx
Replied May 31 2022, 13:01

Joshua,

If it is going to be a gut remodel, and you do not want to worry about the appraisal, there are lenders out there that will cash-out refi the property knowing it will be going thru the rehab process and will NOT require an appraisal. If you have any further questions please feel free to reach out.

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Andrew Postell#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Lender
  • Fort Worth, TX
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Andrew Postell#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
  • Lender
  • Fort Worth, TX
Replied May 31 2022, 16:59

@Joshua Zdunich yeah, ask your lender about this.  Some loans won't have a problem and some will.  So just ask your lender.  They should be able to tell you if this is a big deal or not.

Lender Texas (#392627)

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Joshua Zdunich
  • San Diego
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Joshua Zdunich
  • San Diego
Replied May 31 2022, 18:15

Thanks for the suggestions!

I ended up calling the appraiser and telling him what I did and that I planned on drywalling it back up before he came by.  The guy was beyond cool, had me send him pictures and then told me there wouldn't be a deduction in value based off what he sees!!!  Super happy because I hate drywalling and I absolutely hate spending time/ money on mistake :)

Thanks again everyone! 

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Chris Mason
  • Lender
  • California
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Chris Mason
  • Lender
  • California
ModeratorReplied Jun 1 2022, 13:52
Quote from @Joshua Zdunich:

Thanks for the suggestions!

I ended up calling the appraiser and telling him what I did and that I planned on drywalling it back up before he came by.  The guy was beyond cool, had me send him pictures and then told me there wouldn't be a deduction in value based off what he sees!!!  Super happy because I hate drywalling and I absolutely hate spending time/ money on mistake :)

Thanks again everyone! 


 In general, more for the lurkers, appraisers aren't super busy right now. No more refis, and they're all caught up on the probate court (from all the covid deaths) and divorce court (from all the covid divorces), so they're out to make people happy (within the constraints of their ethical requirements etc).

I've actually had a couple appraisers cold call me for business in the last several weeks. Total 180 from 6 months ago, where we were practically begging them (with rush fees) for the time of day, to do anything. 

Realtors do fewer transactions than we do on the loan side of things, so they are often a little behind the latest/greatest in this sort of thing, but FYI for y'all too. 

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Joshua Zdunich
  • San Diego
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Joshua Zdunich
  • San Diego
Replied Jun 2 2022, 07:56
Quote from @Chris Mason:
Quote from @Joshua Zdunich:

Thanks for the suggestions!

I ended up calling the appraiser and telling him what I did and that I planned on drywalling it back up before he came by.  The guy was beyond cool, had me send him pictures and then told me there wouldn't be a deduction in value based off what he sees!!!  Super happy because I hate drywalling and I absolutely hate spending time/ money on mistake :)

Thanks again everyone! 


 In general, more for the lurkers, appraisers aren't super busy right now. No more refis, and they're all caught up on the probate court (from all the covid deaths) and divorce court (from all the covid divorces), so they're out to make people happy (within the constraints of their ethical requirements etc).

I've actually had a couple appraisers cold call me for business in the last several weeks. Total 180 from 6 months ago, where we were practically begging them (with rush fees) for the time of day, to do anything. 

Realtors do fewer transactions than we do on the loan side of things, so they are often a little behind the latest/greatest in this sort of thing, but FYI for y'all too. 

Chris,

This mirrors my discussion with the appraiser.   

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Kevin Post
  • Lender
  • Dallas, Tx
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Kevin Post
  • Lender
  • Dallas, Tx
Replied Jun 2 2022, 10:09
Quote from @Joshua Zdunich:

Thanks for the suggestions!

I ended up calling the appraiser and telling him what I did and that I planned on drywalling it back up before he came by.  The guy was beyond cool, had me send him pictures and then told me there wouldn't be a deduction in value based off what he sees!!!  Super happy because I hate drywalling and I absolutely hate spending time/ money on mistake :)

Thanks again everyone! 


 Joshua, this may not help you at all. Doesn't matter what value he puts. If the lender sees a photo of the open wall, even if the appraisal is marked as an "AS IS" value, they can still come back and say they will not lend on the property until this is repaired. Keep that in mind. Sometimes they do not catch it tho.