When to have appraisal completed for BRRRR property

Question

The rehab on my BRRRR Duplex that I purchased is nearing completion. I am 2 months into my 6 months of seasoning before I can refinance on the new appraisal. One question I have is when should I be having the appraisal completed? The appraisal is good for 120 days. Should I have the appraisal completed prior to tenants moving in, or should I wait until the units are fully rented? Thanks for any advice you can provide.

Russell Brazil · Answer

Lender will order the appraisal when you refinance. It is not something you the owner does.

Account Closed · Answer

@Gagan Mehta c1-6 are condition ratings so the appraiser can find homes of similar condition and if the homes aren't in similar condition, an adjustment can be made.

Technically the appraiser is not supposed to look at clutter/cleanliness. You can also submit comps that support your value for a reconsideration.

Account Closed · Answer

@Jake Engle did you completely renovate the property? If so, I would appraise it prior to tenants moving in. In appraiser condition terms, c2 condition is a rehabbed house similar to new construction (new construction is c1 though) and is typically only assigned to houses that are not occupied after reno. Once it is occupied, the rating changes to c3. Depending on your value range, it could make a big difference.

Alexander Felice · Answer

you can get an appraisal now, but they won't use it. They are going to order their own, you're going to pay for it, and that's the one that will be used.

Sounds like you're antsy to move forward, which I 100% get, but not sure your idea is going to create any additional efficiency. The loan process doesn't take long, get your stips lined up in advance that's the slowest part of the refi. If you can provide easy docs you can get the whole loan done in under 3 weeks.

Account Closed · Answer

I think it would be best to have it appraised before occupancy if you can swing it. Other posters have pointed out that might not be possible considering the timing of other aspects of the loan. Good luck!

Account Closed · Answer

Actually, you could not be more wrong. Just because lenders and their accomplices have not yet been prosecuted and brought to justice, does not mean they have not been acting illegally.

The wording of the law that lenders twist is referring to requesting an appraiser provide additional data to further support a conclusion already made. In no way shape or form is the wording intended to be a vehicle where lenders can argue value with appraisers as, which ought to be obvious to any unbiased party, that would be a blatant act of impeding appraiser independence - an appraisal is not a debate.

And by the way, the law reads "any person". That means borrowers and realtors too, not just lenders.

While it might be convenient and serve your purpose to take one line of the law out of context and twist the meaning to your benefit, the other parts of the law remain, and all of it will be taken into context in a court of law. Don't even have to be a lawyer to wrap the mind around that truth.

Lenders, realtors and borrowers (and appraisers that go along) have been acting illegally in this regard for some time now, too long. I do wonder when the first prosecution will happen and what that will look like. Considering the scale of activity...wow...it could be a good show.

LOL. Why not just provide the comps/data you have and believe are relevant up-front??? More fun to break the law?

Would you believe me if I told you it was not illegal to rob a bank? How about if the lender told you??? Just because lenders routinely have systems in place for a borrower (not realtor by the way) to submit a reconsideration of value request does not mean it is legal to do it.

Account Closed · Answer

Sooooo disturbing to hear an appraiser went along with this.

Account Closed · Answer

Technically, asking an appraiser to support "your" value, either before or after they have submitted their opinion, is illegal. Just give the comps you have to the appraiser up-front. Don't wait until after it comes back.

Account Closed · Answer

Actually it is not-it is illegal to put any undue influence on them or bribe them to get to your value. It is perfectly legal to submit a reconsideration of value after the appraisal has been completed or to tell them up front what you think the ball park value is (however, they cannot engage in the conversation saying that they agree or disagree). You can submit a reconsideration of value by telling your lender you would like to request a reconsideration of value and submit it with 3 or so valid comps that do support the value you thought you were going to come in at. Appraisers miss comps all the time or search the wrong criteria and they are allowed to fix it.

Account Closed · Answer

@Jake Engle is the other side already rented at $1500 & is that side similar to the vacant side? If so then they usually assume similar rents can be obtained. But they likely won't give the income approach any weight.

When to have appraisal completed for BRRRR property

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