Appraisal on duplex where 1 side is updated

5 Replies

The plan would be to keep the rented side as is until the tenant decides to move (assumed to be years from now).  Rehab current vacant side, rent it and refinance.  The question mark being would an appraiser give 50% at 'as-is' value and 50% at comp rates?  Is this common where sides are not equal? e.g. would I be rolling to dice on the appraisal?

@Josh Van Lente They take the average overall condition of the property and find similar comps that way, if say 1 comp has neither of the units updated then it will get a positive condition adjustment since yours has 1 unit updated. Duplexes with 1 side updated while the other is not is actually very common.

Originally posted by @Josh Van Lente :

The plan would be to keep the rented side as is until the tenant decides to move (assumed to be years from now).  Rehab current vacant side, rent it and refinance.  The question mark being would an appraiser give 50% at 'as-is' value and 50% at comp rates?  Is this common where sides are not equal? e.g. would I be rolling to dice on the appraisal?

 In a perfect world the appraiser would find other duplexes in Oakland with one updated side, and one beat up side, to use as comps. 

What might happen instead, if such data exists, is a paired analysis of beat up v updated duplexes. How much value was added by the updates on average? Great, split the difference. 

Appraisals on unique properties are always a roll of the dice. Cost of doing business.

I as a LO am not supposed to talk to appraisers directly, except of course when I myself am the borrower. You, however, can. Give him a brief and to the point page or 2 of paperwork summarizing data pertinent to what you think the property is worth.

Appraisers can be funny sometimes, you don’t always know what their going to do. It’s always a big question mark. As an agent, when I represent a seller, I always meet with the appraiser when they do their property visit and I always hand them comparables. They probably don’t look at them half the time, but sometimes they are grateful I made their job easier.

I would advise seeking a great real estate agent to help you assess the after repair value prior to your refinancing. They can help make recommendations on getting the most value out of your property and give you comps to help you evaluate when to refinance. Just make sure to make it worth their time.