Flipper/Rehabber · Detroit, MI · Member since 2018 · 33 posts · 17 votes
I bought a house in Detroit for 31K I rehab the home for 25k looking to do the BRRRR Method I had a hard money lender that I deal with set up but their minimum is 75K. When I went to refinance the home the appraisal came back at 32K. What can I do and how do I prevent this from happening agin in the future? please help
First, you can't choose your own appraiser. This is (partly) what cause the housing bubble. If I can choose my appraiser, why not hire my buddy, cousin, sister, etc. and have them juice the appraised value for me? I believe there are laws against this, and the lender has to follow a process.
You should have received the appraisal report showing you exactly what comps they used. And here's the thing, if there are no comps pointing to the value you expected it won't matter how much money you dumped into this house. So "preventing" this from happening again in the future is as easy as making sure you have the comps to support the investment. If you don't (and often you do not in Detroit), it shouldn't at all be a surprise why this didn't appraise for where you expected.
Lastly, it doesn't matter what you paid for a house. Maybe this house truly is worth $32k fixed up and you just made a bad purchase. I don't know because I don't know the address, the actual condition of the property now, etc. I'm happy to take a look and provide my opinion, but it's just that. My opinion doesn't do you any good in terms of changing the appraised value. But it might help you refine your strategy for future purchases.
@Timothy Moore okay I spoke to the lender and they are willing to let me get a second appraisal & also told me I can pic the company just not the actual appraiser do you know any company to recommend?
We had issues with an appraisal in 2019, and tried to challenge it. Unfortunately it didn't work out - but in the end we found another way. Would the property work as a rental, maybe reappraise it in a year or 2 and refinance it to access your cash?
Quick update here. @Jermyn Brown shot the appraisal over to me via email. It was a tough one... nicely done rehab, but on a busy road without anything to really comp it to. My advice was to try and sell it to an investor now that he has a tenant in paying $1,100/mo. Plus, a conventional loan wouldn't work with the appraisal as low as it is.
I have a realtor I love and work a lot with. He deals a ton with investors. I put them in touch. Jermyn emailed me a couple days ago and said that our guy already found a buyer, closing on Jan. 31st for $61,000.
It's definitely not a big win for Jermyn, but it gets him out a bit better than break even. A free, valuable lesson.
I'm glad I could help!
Also, for those wondering... I get absolutely nothing for the referral except some good will :-)
Quick update here. @Jermyn Brown shot the appraisal over to me via email. It was a tough one... nicely done rehab, but on a busy road without anything to really comp it to. My advice was to try and sell it to an investor now that he has a tenant in paying $1,100/mo. Plus, a conventional loan wouldn't work with the appraisal as low as it is.
I have a realtor I love and work a lot with. He deals a ton with investors. I put them in touch. Jermyn emailed me a couple days ago and said that our guy already found a buyer, closing on Jan. 31st for $61,000.
It's definitely not a big win for Jermyn, but it gets him out a bit better than break even. A free, valuable lesson.
I'm glad I could help!
Also, for those wondering... I get absolutely nothing for the referral except some good will :-)
Good ending to this one. Definitely some good karma for you. I read the title of the post, and was like "oh man, this is not going to be good for this guy." Glad he was able to get out relatively unscathed.
Quick update here. @Jermyn Brown shot the appraisal over to me via email. It was a tough one... nicely done rehab, but on a busy road without anything to really comp it to. My advice was to try and sell it to an investor now that he has a tenant in paying $1,100/mo. Plus, a conventional loan wouldn't work with the appraisal as low as it is.
I have a realtor I love and work a lot with. He deals a ton with investors. I put them in touch. Jermyn emailed me a couple days ago and said that our guy already found a buyer, closing on Jan. 31st for $61,000.
It's definitely not a big win for Jermyn, but it gets him out a bit better than break even. A free, valuable lesson.
I'm glad I could help!
Also, for those wondering... I get absolutely nothing for the referral except some good will :-)
Good ending to this one. Definitely some good karma for you. I read the title of the post, and was like "oh man, this is not going to be good for this guy." Glad he was able to get out relatively unscathed.
Absolutely. I'm happy it worked out in the end. Great mini case study here for folks in the future, too.
@Jeff Rollon for sure it shows what you made of. I just wanna thank bigger pockets and supper special thanks too @Travis Biziorek truly Gave me an ally oop I’m for ever in debt to for you the Dave plug if you need anything just let me know I’ll do my best to complete the task. This Journey Truly changed my whole out look & my approach 2020 is going to be great year for all of us!
@Jeff Rollon for sure it shows what you made of. I just wanna thank bigger pockets and supper special thanks too @Travis Biziorek truly Gave me an ally oop I’m for ever in debt to for you the Dave plug if you need anything just let me know I’ll do my best to complete the task. This Journey Truly changed my whole out look & my approach 2020 is going to be great year for all of us!
Glad I could help, and even happier it worked out ok, man.
Shoot me an email any time. Would love to check out your next project.