Again, just another Bay Area ADU Appraisal cost
#1 Market Trends & Data Contributor
Here we go, another bay area ADU appraisal topic, some folks here know that I planned to build ADU way back in 2018 but canceled and instead, I use the money to purchase another duplex still in the bay area, but that duplex I already sold in 2021 with very nice three digits IRR lol :)
So last month I was able to secure 1900k sqft SF that comes with a "free 400sqft detached ADU", I purchased it below the price, but the appraisal is funny, they are trying to be very conservative so they put the living square as 1500 sqft as they value the first floor for only 1/4 of the price although it's livable living space. For ADU in the back, they assign it a zero value. I guess it's a seller and appraisal mistake but it comes as a buyer advantage.
I know folks suggesting using Figure's fixed-rate HEL loan that uses automatic valuation software for HELOC, do you know when I could that after rehabbing the house? Is there any approach that I could use so that for any appraisal in the future, they would price the ADU accordingly? how about if I hire an ADU appraisal expert before I sell to challenge the future appraisal? any other hacks/tips ?
( One thing that I do notice, selling the house in very good condition and good rehab especially flooring is extremely important )
@Brad S.. I stand corrected. I can't choose the name of the appraiser but I can choose the price. My banker gives me three choices in pricing but no names. Regardless of the vendor I choose I have to educate them on the property anyway when they call me so that's why I go with the lower price vendor. I am speaking from the commercial side and not the residential side of things as well. The investor does do a ton of due diligence on the property compared to the average buyer so it's important for them to educate the appraiser to insure maximum value.
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Quote from @John McKee:
@Brad S.. I stand corrected. I can't choose the name of the appraiser but I can choose the price. My banker gives me three choices in pricing but no names. Regardless of the vendor I choose I have to educate them on the property anyway when they call me so that's why I go with the lower price vendor. I am speaking from the commercial side and not the residential side of things as well. The investor does do a ton of due diligence on the property compared to the average buyer so it's important for them to educate the appraiser to insure maximum value.
It seems from Brad's suggestion, we can do our own appraisal with our own appraiser, and then submit it to the lender or buyer and appraiser, to influence / educate their decision.
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@Brad S. question for you, is the appraiser have the ability to examine the previous year's appraisal from anyone else?
can they search appraisals of any home in US archives of appraisers? Is this information shared among the appraisal community?
Quote from @Carlos Ptriawan:
@Brad S. question for you, is the appraiser have the ability to examine the previous year's appraisal from anyone else?
can they search appraisals of any home in US archives of appraisers? Is this information shared among the appraisal community?
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No, each appraisal is done for a specific purpose and a specific client and the client owns the appraisal and the appraiser has the duty of confidentiality to the client and therefore, cannot share the report or their opinion derived from the assignment, with anyone, without expressed specific permission from the client. In a financial transaction the client is typically the lender.
Quote from @Carlos Ptriawan:
Quote from @John McKee:
@Brad S.. I stand corrected. I can't choose the name of the appraiser but I can choose the price. My banker gives me three choices in pricing but no names. Regardless of the vendor I choose I have to educate them on the property anyway when they call me so that's why I go with the lower price vendor. I am speaking from the commercial side and not the residential side of things as well. The investor does do a ton of due diligence on the property compared to the average buyer so it's important for them to educate the appraiser to insure maximum value.
It seems from Brad's suggestion, we can do our own appraisal with our own appraiser, and then submit it to the lender or buyer and appraiser, to influence / educate their decision.
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Hey Carlos, That wasn't my response. that was from John.
Basically, you can't "influence" the appraiser and no lender will accept an appraisal ordered from someone involved in the transaction.
Quote from @John McKee:
@Brad S.. I stand corrected. I can't choose the name of the appraiser but I can choose the price. My banker gives me three choices in pricing but no names. Regardless of the vendor I choose I have to educate them on the property anyway when they call me so that's why I go with the lower price vendor. I am speaking from the commercial side and not the residential side of things as well. The investor does do a ton of due diligence on the property compared to the average buyer so it's important for them to educate the appraiser to insure maximum value.
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I assumed you were talking about residential. Commercial is a different animal although, the appraisal process does parallel residential in many aspects. Like, Lenders will typically not allow someone in the transaction to influence who the appraiser is, although, I don't believe it is specifically against any laws, as it is with federally related transactions.