Is an appraisal necessary/recommended?

8 Replies

I have an accepted offer from a seller for a triplex and owner financing. I will be getting a rent roll and lease agreements to confirm, but assuming they haven't lied about the rental income then the purchase price I'm getting this property for pencil's out. 

Being that it is owner financing, my plan is to refinance it into conventional as soon as i can while avoiding PMI.

I could go into deal analysis if anyone is curious, but I mostly just wanted to ask a cursory question of this. "If the deal makes sense cash flow wise, should i still pay for an appraisal?"

It isn't that i'm not curious what the appraisal would come in at, but I will likely be getting one when i go to refinance in 6-18 months and all the value would do right now is: 

1) Give me a more accurate idea of what the bank would value the property at

2) Delay closing as appraisals are 3 weeks out minimum right now

3) If it comes in high the seller could use that info to back out

4) Add additional costs (around $950) to the closing

P.s. - I will still be ordering an inspection.

Thanks in advance!

Originally posted by @Shane H. :
Originally posted by @Caleb Heimsoth:
@Shane H. I would do a minimum appraisal at the least. You’re not obligated to share the result with a seller

So not a full appraisal but like an ARV?

Sort of. Do two things.  Find an agent to run comps. Then find an appraiser to do a Drive by appraisal 

Originally posted by @Shane H. :
Originally posted by @Caleb Heimsoth:
@Shane H. I would do a minimum appraisal at the least. You’re not obligated to share the result with a seller

So not a full appraisal but like an ARV?

 I remember an old thread where the buyer got like a duplex on seller financing.  Terms and DP all looked good.  Then she went to refinance like 2 years later and it appraised for 50k less then she paid.  Now a good deal turned out to be awful.  Long story short get an appraisal in my opinion, even if it’s not a full appraisal 

I would not bother with an appraisal.

1. your more accurate idea of the property value won't be actionable, and the bank will definitely get one when they go to loan.

2. why would you want to delay closing?

3. exactly. don't give him a reason to rethink your deal

4. that's way too much for an appraisal anyway.

appraisals are expensive, and this one is unnecessary. if it comes in low, you'll be sad about your deal. if it comes in high, the seller will be sad about his deal.

You have nothing to gain from an appraisal and a lot to lose.

@Shane H. I would atleast run comp sales In the neIghborhood Id look up the tax assessment and run some analysis on its condition compared to others in the area . You ought to know what’s its worth within a 10k window .

The Comps are ALL over the place, there just isn't anything similar with the same criteria in a decent radius so they range from $150k-$350k. I'm buying it for $210k. I scheduled inspection for Wednesday and I'm working on getting a drive by appraisal.