Appraisals for refinances

Sacramento, CA · Member since 2026 · 10 posts · 4 votes

Hi,
I am a small time Mom and Pop real estate investor in Sacramento, CA. My partner and I have three SFH rentals and we're doing our second flip. I have been diligently listening to the BP real eatate podcasts lately and I want to do more BRRR's. I have a question about appraisals. Every time we have appraised for a refinance, the appraisers in our area are very, very, conservative and pull low comps and the homes get appraised below market value even when I ask them to redo it, and I can't afford to keep paying for more and more appraisals without knowing what the end result will be. How can I properly do the BRRR method is after rehabbing the properties, the appraisal value won't let me pull my equity out? This is the issue we are encountering and so I never have cash down payment for another investment because my money is tied up in the properties, so what I do is I pull money out of a HELOC for the down payment but then it's hard to have cash flow when the rent will barely covers the mortgage plus the HELOC payment with these interest rate rates. Also, it's just not realistic to buy cosmetic fixers for under about $350,000-$400,000 in my area, and again with the interest rates and the appraisals coming in low it's a huge barrier.

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Nathaniel B.

Lender · Irvine, CA · Member since 2014 · 9 posts · 8 votes

1mo

Your rehabs aren't the problem. Your exit lender is.

I've done investment lending for 15+ years, and this isn't three bad appraisers in a row, it's the retail conventional channel working as designed. When you refi through Rocket or the big banks, the appraisal comes through an AMC, and those appraisers are graded on how defensible their number is, not how accurate. The one you talked to told you the truth: they anchor to purchase price and won't come in high because the bank's review desk will kick it back. They have no incentive to fight for your value.

Two things compound it. Inside 12 months of purchase, both the appraiser and the lender lean on your recent sale, so your off-market "got it cheap" price becomes the ceiling on your ARV. And big lots or rare homes don't show up on the form, if comparable properties rarely trade, there's nothing to support the premium even though the market would pay it.

Here's the part I'd push back on. You've decided the issue is the appraisers. It's really the channel, and the channel is what you control.

Stop refinancing value-add rentals through retail conventional. A DSCR lender or a local portfolio bank appraises to as-is market value and rent, not to a fear of the review desk. The rate is higher, but a great conventional rate with your equity locked up is a worse outcome than pulling cash at a slightly higher DSCR rate and redeploying it. That's the real BRRRR math, and it's exactly why DSCR is the natural BRRRR exit. Your primary is the hard one, that has to be owner-occ conventional, so you're stuck with the retail process there.

Three moves that actually shift numbers: give the appraiser a packet (scope of work with costs, before/after photos, permits, and a few of your own comps), order through the DSCR or portfolio lender instead of the retail AMC pool, and file a Reconsideration of Value with new comps when one comes in low.

The appraisers won't change. Switch your rental refis to DSCR or a local bank, wait past 12 months when you can, and bring a comp packet every time.

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Michael Eskenasy
Investor · Pacific Northwest · Member since 2026 · 538 posts · 307 votes
1mo
Janee — I think the big issue is that BRRRR only works if the refinance actually gives you enough capital back to keep moving.
If Sacramento appraisals consistently come in conservative, I'd stop underwriting to the ARV you hope for and start underwriting to the appraisal you're likely to get.
If you think a finished property is worth $500K, run the deal at $450K–$460K and see if it still works. If too much cash stays trapped, it may still be a good rental — just not a good BRRRR.
The HELOC can bridge that gap, but if the rental barely carries the mortgage plus the HELOC, you're basically replacing trapped equity with expensive debt.
Before your next one, I’d also talk to a few investor-focused lenders and understand their appraisal/reconsideration process before you buy.
And now if you really want to party, send me the address of the last house that appraised low, what you thought it was worth, and what the appraisal came in at.
That would be interesting to tear apart.
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Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
I don't like to give out my property addresses because I am already flooded with real estate spam emails and phone calls. But to give you an idea of three refi appraisals that came in low, the first was a rental we bought in 2020 for $330K, built in the 50's but in the 80's they added a 2nd story so it is 5 bedrooms (garage converted to a bedroom), 3 bath. We got it cheap (off market) but it needed a lot of work. That's how it works in CA, if it's low it needs a lot, but if you want a cosmetic fixer you are going to pay $400K+ and with the interest rates what they are even with 20% down the rent might not even cover the mortgage, rents here in Sacramento are modest, not like bay area or LA rents. Unless you do co living and rent by the room but we didn't want to do that. Anyway so we put a new roof, new flooring, updated the bathrooms and kitchen (except cabinets we just painted, they were ok), totally rebuilt the upper floor balcony, painted inside and out. About $60-70K in when you add in hard money loan payments, closing costs for original purchase + refi. The appraisal came in at $350K, that's it, even though if you look at homes selling in that neighborhood and area of that size it would have easily sold for $425-450K. So couldn't pull any equity out but we do make about $700 per month cash flow mainly because we got a great interest rate back in 2021. 2nd deal we bought in 2022, 3bd 1 ba smaller older home, 1000sqft, bought for $240K but in bad shape, had termites. Fixed all termite damage, gutted and re did the bathroom, new plumbing, new windows, new flooring, new roof, new garage door, paint inside and out, new stucco, and hvac and kitchen were already updated, just needed new dishwasher. After hard money interest payments and closing costs on both ends, in it about $60-70K again, and even though rehabbed/updated homes of that size in that area easily go for $380-$400K, it appraised at only $330K. We did do a cash refi so we could at least pull about $30K out to pay off our Home Depot/rehab debt. We rented it out and broke even monthly because the interest rates went up to 6.5%.Then in 2024 same thing happened with our primary home, we bought a hoarder/fixer upper on almost an acre lot, great location, for $430K, we fixed it all up, needed foundation work which was expensive, that was a big risk, but it is almost impossible to find homes like these on big lots. So we were in it about $560K and only appraised at $608K, tricky to find comps because again the homes in this area rarely go up for sale. The appraiser don't take into account the size of the lot at all and I had a long discussion with them and they said they don't like to appraise homes for too much over the purchase price because they said the bank will question it. Which infuriates me because yeah the reason why the value is so much higher is because it was a major fixer upper! One of our friends who sold their home less than a mile away sold for $608K and it was over 300sq ft smaller than our house and on a standard lot, so why did ours appraise at the same? His home was 20 yrs newer but that shouldn't matter because we completely updated everything in our home, new copper water lines, new plumbing, everything. But the appraiser said they take the age of the home into account also. It doesn't really help to work with "investor friendly" lenders because when we refinance we are working with the large mortgage banks like rocket mortgage, etc. so they don't care about investors. We need a conventional loan. And we have a great loan officer that does compare Loans with a bunch of banks so that is not the issue. The issue is the appraisers. They are way too conservative so I don't know how people are doing BRRRR or rentals in my area without their money being totally locked up.
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Nathaniel B.
Lender · Irvine, CA · Member since 2014 · 9 posts · 8 votes
1mo
Your rehabs aren't the problem. Your exit lender is.
I've done investment lending for 15+ years, and this isn't three bad appraisers in a row, it's the retail conventional channel working as designed. When you refi through Rocket or the big banks, the appraisal comes through an AMC, and those appraisers are graded on how defensible their number is, not how accurate. The one you talked to told you the truth: they anchor to purchase price and won't come in high because the bank's review desk will kick it back. They have no incentive to fight for your value.
Two things compound it. Inside 12 months of purchase, both the appraiser and the lender lean on your recent sale, so your off-market "got it cheap" price becomes the ceiling on your ARV. And big lots or rare homes don't show up on the form, if comparable properties rarely trade, there's nothing to support the premium even though the market would pay it.
Here's the part I'd push back on. You've decided the issue is the appraisers. It's really the channel, and the channel is what you control.
Stop refinancing value-add rentals through retail conventional. A DSCR lender or a local portfolio bank appraises to as-is market value and rent, not to a fear of the review desk. The rate is higher, but a great conventional rate with your equity locked up is a worse outcome than pulling cash at a slightly higher DSCR rate and redeploying it. That's the real BRRRR math, and it's exactly why DSCR is the natural BRRRR exit. Your primary is the hard one, that has to be owner-occ conventional, so you're stuck with the retail process there.
Three moves that actually shift numbers: give the appraiser a packet (scope of work with costs, before/after photos, permits, and a few of your own comps), order through the DSCR or portfolio lender instead of the retail AMC pool, and file a Reconsideration of Value with new comps when one comes in low.
The appraisers won't change. Switch your rental refis to DSCR or a local bank, wait past 12 months when you can, and bring a comp packet every time.
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- Scott WolfPro Member
  Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 958 votes
  1mo
  Quote from @Nathaniel B.:
  
  Your rehabs aren't the problem. Your exit lender is.
  I've done investment lending for 15+ years, and this isn't three bad appraisers in a row, it's the retail conventional channel working as designed. When you refi through Rocket or the big banks, the appraisal comes through an AMC, and those appraisers are graded on how defensible their number is, not how accurate. The one you talked to told you the truth: they anchor to purchase price and won't come in high because the bank's review desk will kick it back. They have no incentive to fight for your value.
  Two things compound it. Inside 12 months of purchase, both the appraiser and the lender lean on your recent sale, so your off-market "got it cheap" price becomes the ceiling on your ARV. And big lots or rare homes don't show up on the form, if comparable properties rarely trade, there's nothing to support the premium even though the market would pay it.
  Here's the part I'd push back on. You've decided the issue is the appraisers. It's really the channel, and the channel is what you control.
  Stop refinancing value-add rentals through retail conventional. A DSCR lender or a local portfolio bank appraises to as-is market value and rent, not to a fear of the review desk. The rate is higher, but a great conventional rate with your equity locked up is a worse outcome than pulling cash at a slightly higher DSCR rate and redeploying it. That's the real BRRRR math, and it's exactly why DSCR is the natural BRRRR exit. Your primary is the hard one, that has to be owner-occ conventional, so you're stuck with the retail process there.
  Three moves that actually shift numbers: give the appraiser a packet (scope of work with costs, before/after photos, permits, and a few of your own comps), order through the DSCR or portfolio lender instead of the retail AMC pool, and file a Reconsideration of Value with new comps when one comes in low.
  The appraisers won't change. Switch your rental refis to DSCR or a local bank, wait past 12 months when you can, and bring a comp packet every time.
  
  So Nathaniel, does your firm not use AMC's on DSCR loans? If not, how are you getting to value?
  1 Reply
- Erik EstradaBusiness Member
  Lender · Member since 2022 · 6k+ posts · 1k+ votes
  1mo
  Most DSCR lenders will use an AMC to determine the appraised value. I have also seen many lenders both wholesale and private lenders have a CDA or some form of appraisal review committee to confirm the accuracy of the appraisal, despite ordering through their preferred AMC. Either way, lenders can still cut value if either of the two do not pass.
  I think the main issue here is not have a realistic expectation of the value. If multiple appraisers/AMCs are not giving it the value you think it will be, then maybe there is something more to look at... The deal is made in the purchase, not in the exit.
  If you are conservative in your numbers, your exit loan is under 70% LTARV and you really dial in on the acquisition, saying NO to most deals and buying deals that actually make sense, you will have a bit better luck on your exit strategy.
  I have seen this same scenario time and time again. Investor bought out of FOMO, paid more, and now can't make the numbers work on the exit. They grill the fees on the loan/closing costs, in order to squeeze a drop of profit. Sometimes you are better off holding tight and buying when it pencils out.
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Joe Piccirello
Lender · Peoria, AZ · Member since 2026 · 21 posts · 7 votes
1mo
A few things that help on rehab refis. Give the appraiser a written scope of work with costs, before and after photos, permits, and three or four comps you think support your value, at the inspection. If the value comes in below what the data supports, you can file a reconsideration of value with the lender and submit specific comps rather than just asking for a redo. Also confirm which valuation product the lender is ordering, since a full interior appraisal, a drive-by, and an AVM can produce different numbers. On rentals, a DSCR loan is underwritten off the property's cash flow rather than your personal income, and lenders vary on how they treat recently renovated properties and seasoning, so it is worth asking about that up front before you pay for another report. I'm a loan officer licensed in California.
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Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
You really hit it on the head, thank you for your reply. This makes sense to me why this keeps happening with the retail conv loans and the AMC pool, like you said they are incentivized to be conservative for the banks, not to be accurate. I have heard about DSCR loans but never tried it, aren't their interest rate quite a bit higher though? I don't even know how to get one of these loans and I don't want a balloon payment or short term like 5 or 10 yrs where I'm panicking in 5 or 10yrs that I have to refi again. I will look into local banks too, there are a few credit unions here but I have a feeling their appraisers will just be like the others? I don't have any connections to non-chain local banks.
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Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
@Joe Piccirello yeah the seasoning is an issue because we get 6 month term hard money loans so I usually can't wait for that 12 month seasoning requirement now. Do the DSCR loans require 12 month seasoning? I know the third example of mine was my primary home so DSCR was not an option. Thank you for the tip on the comp report, I will do that now, wish I had done it before! With rehab costs so high in CA these appraisers need to see how much money we are throwing into these homes, and the bad condition they were in that justifies the low purchase price that is throwing off the comps.
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Joe Piccirello
Lender · Peoria, AZ · Member since 2026 · 21 posts · 7 votes
1mo
On seasoning, there is no single universal rule. Conventional cash-out has its own seasoning and value rules, while DSCR seasoning is set by each lender's program, so some will use the new appraised value sooner after a rehab and others want a longer ownership period before they will lend on the improved value. Since you are using 6-month hard money terms, ask that exact question before you order the appraisal: how long must I own it before you use as-completed value instead of my purchase price, and do you want the rehab documented with invoices and permits. Get it in writing from two or three lenders so the exit is lined up before you buy. On structure, DSCR is underwritten off the property's cash flow rather than your personal income, and terms vary a lot by lender, so if you do not want a balloon or a short term, say that up front and ask for the fully amortizing options and the prepayment penalty schedule in writing. Pricing generally runs above conventional, so the comparison is the cost of the higher rate against the cash you actually free up and redeploy. Local credit unions and small portfolio banks are worth a call too, since a loan they keep in house is not bound by the same secondary market rules. I'm a loan officer licensed in California.
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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
1mo
Quote from @Janee Jacobs:

Hi,
I am a small time Mom and Pop real estate investor in Sacramento, CA. My partner and I have three SFH rentals and we're doing our second flip. I have been diligently listening to the BP real eatate podcasts lately and I want to do more BRRR's. I have a question about appraisals. Every time we have appraised for a refinance, the appraisers in our area are very, very, conservative and pull low comps and the homes get appraised below market value even when I ask them to redo it, and I can't afford to keep paying for more and more appraisals without knowing what the end result will be. How can I properly do the BRRR method is after rehabbing the properties, the appraisal value won't let me pull my equity out? This is the issue we are encountering and so I never have cash down payment for another investment because my money is tied up in the properties, so what I do is I pull money out of a HELOC for the down payment but then it's hard to have cash flow when the rent will barely covers the mortgage plus the HELOC payment with these interest rate rates. Also, it's just not realistic to buy cosmetic fixers for under about $350,000-$400,000 in my area, and again with the interest rates and the appraisals coming in low it's a huge barrier.

The reality is that right now we are in a pretty grueling RE market where prices are pretty stubbornly stable and the valuations and appraisal determinations are out of anyones hands. A lot of the history of "BRRRR" popularity and real estate investing (including flips) in the last decade and a half has been through a period of extremely low rates and monetary debasement/asset inflation where ARVs bailed out a lot of post-renovation comps that rose with the market vs. a true value add. I think its a good bet that BRRRR will have success soon and in the future, but for the time being just living with the slowness and conservative valuations is just going to have to be a reality for executing on a lot of the cash-out refis.
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1mo
Janee, this is exactly why I'd treat the refinance as part of the BRRRR plan, not as a guaranteed outcome.

If the deal only works when the appraisal comes in at your target ARV, there isn't much margin for error. Before starting the rehab, I'd work backward from a conservative refinance value and ask: if the appraisal comes in 10–15% below my target, can I still hold the property comfortably without needing to immediately pull all my capital back out?

For the appraisal itself, I’d make sure you have a clean package showing the completed scope of work, invoices, permits where applicable, before-and-after photos, and the best comparable renovated sales you used when underwriting. You obviously can’t control the appraiser’s conclusion, but you can make sure the completed improvements and condition of the property are well documented.

I'd also be cautious about repeatedly using a HELOC just to replace capital that didn't come back through the refinance. If the HELOC proceeds are being used to acquire or improve another investment property, the interest may generally be traced to that investment use rather than simply following the property securing the HELOC, so keeping the draws and documentation clean matters.

From the tax side, your rehab records are useful for more than the appraisal. Once the property is placed in service, that same detail can support depreciation, cost segregation, and potentially partial-disposition planning when old components were replaced.

For the next BRRRR, I'd want it to survive a lower appraisal, higher refi rate, and more cash left in the deal than originally planned. If it still works under those assumptions, you're much less dependent on the appraiser to make the strategy succeed.

Happy to connect and share some of our resources that might be helpful!
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Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 508 votes
1mo
Generally speaking,, appraisals are coming in lower than some investors predict. What can help is having a packet that explains the work that you did at the property and the costs associated with the work that is given to the appraiser. Investors I work with have had success with this strategy. Having before and after photos can help as well. Any comps you want to give to the appraiser for sales or rental contracts that have closed that are located as close to the property being refinanced and are as recent as possible. There's no guarantee that the appraiser will use this information but it's better than handing over nothing.
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Lipa F.
Investor · Member since 2024 · 79 posts · 32 votes
1mo
Use a dscr loan and the apprasir will come in higher then you want and the rates aren't to much higher
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Gregory AcsPro Member
Lender · MD · Member since 2025 · 203 posts · 82 votes
1mo
I think this is one of the biggest challenges with the BRRRR strategy, especially in markets where appraisers tend to be conservative. I'd underwrite every deal assuming the refinance could come in lower than expected, rather than counting on pulling all of your capital back out. That way, if the appraisal is stronger than expected it's a bonus, not a requirement for the deal to work.
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Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
Thank you all for your advice. Next time I will definitely supply the appraiser with a report with before/after photos, renovated comps vs unrenovated, costs, etc. @Ashish Acharya, I am honestly not sure if I am pulling money out of my heloc's in a "clean" manner as you mention but since the homes are in my personal name and not the names of a business I report my mortgage interest from the Heloc's appropriately, as a deduction from the home it's attached to. So I'm not including it in the renovation or cost basis for the rehab or flip. Yes I need to do a cost segregation analysis for sure next year, I will look into how to do this, to optimize my tax situation. Honestly in my market in Sacramento, CA, and pretty much everywhere in CA there isn't much margin or room for accounting for a lower appraisal value. If I plan on the appraisal coming in 15-20% lower than ARV as they have been then the numbers won't make sense and I wouldn't be investing. But I choose to take the risk and invest because doing nothing won't get you anywhere. Maybe in other states you can pencil in lower appraisal expectations and still make a good deal, not in CA. Unless you have loads of cash to put down but like I said I'm a small time RE investor with a family and lots of expenses, young children in school, I can't do house hacking or live in flips, so I'm doing the best with what I have.
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Terry Garrett
Member since 2026 · 47 posts · 9 votes
1mo
I’ve actually dealt with something very similar on one of my properties. I had multiple appraisals done and one came in about $100K lower than where I thought the property should be. I ended up appealing it and was able to get the value moved closer to where I needed it.
It definitely taught me that the appraisal can make or break the refinance, especially when you’re trying to pull your equity back out.
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Gordon CuffePro Member
Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
1mo
@Janee Jacobs I fix n flip houses around the Sacramento area up to Colfax. I am also a mortgage broker in Roseville. If you are talking about an appraisal back in 2021, it could also have been that values increased so fast that the appraisal had old comps so the appraisal came in lower than what it would have sold for. I dont know where a person can buy a 5br home around the Sacramento area for less than 400k now let alone less than 500k. I did a remodel on a house in Grass Valley and my appraisal came in 100k higher than I listed it for once the remodel was finished. Home values have been flat the last couple of years so appraisals should come in pretty good now. If you ever have questions related to real estate, you can DM here or easily find me online.
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Nicholas FloydBusiness Member
NY · Member since 2026 · 241 posts · 86 votes
1mo
You’re running into one of the biggest risks with the BRRRR strategy — the deal can look great on paper, but if the refinance appraisal doesn’t support the expected ARV, your capital stays trapped. I’d underwrite future deals using a more conservative refinance value and make sure the numbers still work before purchasing.

I’d also talk with the refinance lender upfront about seasoning requirements, LTV limits and how they typically approach comparable sales. If the deal only works when you get a perfect appraisal, there probably isn’t enough margin built in.

On the capital side, I work with investors on business lines of credit, 0% introductory APR business credit cards and other business funding options that can provide additional liquidity for rehab and holding costs without automatically leaning on a personal HELOC every time. The key is matching the funding strategy to the exit so the additional payments don’t destroy the cash flow.
1 Reply
Joshua Hicks
Rental Property Investor · Central PA · Member since 2026 · 20 posts · 11 votes
1mo
Switch banks. The big lenders pull an appraiser off a list and that guy gets paid to be safe, not right. He's never going to stick his neck out for your number.
Find a local bank that holds its own loans. They use appraisers they trust, and they want the loan to work as much as you do. You can usually meet the appraiser at the property with your before and after photos, your rehab costs, and a couple comps you pulled yourself. That changes the conversation. Changing banks did more for my appraisals than anything I ever did to the houses.
And when you find one that's good to work with, stay. Every property I've refinanced since has gone through the same people, and they know what I do to a building before they even see it.
1 Reply
Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
@Gordon Cuffe thanks for your reply, and it is good to hear from someone in the Sacramento and CA in general because it's a whole different ballgame out here compared to other states. Yes I agree 2021 was different back then, comps were not good due to the rapid value inc. But we also did a refi in 2024 and got the same result of appraisals coming in at least $50K lower than ARV and appraisers using old comps a year old and unrenovated comps. As others mentioned on the forum, AMC appraisers are incentivized for defensibility to the banks, not for accuracy and they are using the purchase price as a benchmark and won't appraise too high over the purchase price. Well we buy very distressed properties, hoarder properties, so the purchase prices are accordingly pretty low and the appraiser even told me, well I can't justify to the bank how this home has increased in value by $200K. And I'm sitting here like well we put $150K into it and if you look at more accurate comps (but they refuse to because they don't think they can justify the big inc in value to the bank), then yes it has increased by that much! But anyway others on here have suggested some tools to use next time like providing the appraisers with a packet/report of examples of renovated comps in the area, before and after pics, and breakdown of the actual costs of renovations so at least they are more informed. May not work but I can try. I think going with a different loan product like DSCR may be an option also, but I'll look into this for the next deal.
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Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
@Erik Estrada well we will have to agree to disagree then. We indeed have very realistic expectations of the value and we are getting great deals on the purchase, buying homes off market for about $200K below market value because they are major fixer uppers (but we usually only put in $100K max for rehab so believe me we are definitely leaving a cushion in there). The issue is DEFINITELY in the exit financing strategy, not the purchase and not with unrealistic expected ARV's. And we are only doing a deal every other year or so, we both have other full time jobs and kids, we are not full-time flippers or RE investors who have deals coming at us left and right and can turn down deals. If I just tighten up and get even more conservative (like I said we ARE conservative with the numbers before we buy, we fully inspect the homes and only buy in our area where we fix the home ourselves, we have good subcontractors helping us that don't overcharge us and do good work, we make sure there is a huge cushion on profit for a flip and we make sure we have cash flow and at least can pull our rehab costs out of BRRR's) and always expect appraisals to be coming in at least 15-20% lower than actual ARV then I wouldn't do any deals at all, at least not in CA. On that note, I am going to start looking at out of state real estate investing for these BRRR's also because the numbers just don't pencil out in CA anymore, the BP podcasts state that as well. And others on here have given me great ideas for our next BRRRR, using diff loan products, local banks, providing a comprehensive report to the appraisers, etc. so I will try those tactics.
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- Erik EstradaBusiness Member
  Lender · Member since 2022 · 6k+ posts · 1k+ votes
  1mo
  You brought up a very good point. Being in the industry full-time does give you a huge upper hand when analyzing deals & financing structures. Maybe it might just be the lenders/AMCs you are currently working with are not working in your favor. But if I am assuming you are using a traditional A-Paper bank/lender like a rocket mortgage or chase, they generally use an independent AMC, and that AMC selects an appraiser to go out and see the property to give it its value. Some of these appraisers are experienced and know the area very well, others, which I have seen do not have experience in the area or are fairly new. This usually happens in areas that have a lack of appraisers qualified by the AMC. Regardless, the lender/bank is not in the business to not lend you money. They need new business, especially in a slower buyer market. So I don't agree that the lender has any kind of incentive to slash your value aggressively or has a close connection with the AMC, unless the lender owns that AMC or must approve the appraisers assigned (which I have typically seen at small lenders, commercial lenders, or private lenders).
  If you are buying in California, you might find that some pockets are not BRRRR friendly. I am not sure how Sacramento is per se, but here in Los Angeles you can find areas that are still appreciating rapidly and others that are correcting due to housing affordability. It could be that your area may not be the most BRRRR friendly and may be your luck that the appraisal is coming in lower. Generally when you provide an ROV, the appraiser will comment on the features of the comparable you provided and will point out the flaws of the comps or use them and give you a higher value. I have seen that many successful ROVs usually come from Real Estate Agents that are actively in the business buying and selling homes, serial flippers, or even from appraisers themselves. If you are only doing a deal here and there, it will be a lot harder to argue with an appraiser that does this for a living and also might have an ego. Not saying it's impossible, but they will find every flaw especially if the comps were just generated by a generic CMA online.
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Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
@Joshua Hicks I am definitely going to look into this also, I have only been refi'ing with the large commercial banks and like you said their AMC appraisers are incentized to be safe, they use our purchase price as a benchmark and refuse to appraise more than a certain amount above our purchase price, but we buy pretty distressed properties, hoarder properties, big fixer uppers, not cosmetic fixers, so of course our purchase prices are low and it is not accurate to be using that as a benchmark, but they do, they even outright told me that last time. I will try contacting local banks, do you mean credit unions? Here is CA it is mostly just the big chain banks and then credit unions, not really any small "local" private banks that I've seen. I'm not sure credit unions will do a refi for me but I will check.
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Janee Jacobs
OP
Sacramento, CA · Member since 2026 · 10 posts · 4 votes
1mo
@Erik Estrada yeah Sacramento can be a BRRRR market but only if you get an off market fixer upper and a decent appraisal that's not $50-100K lower than actual market value. You can't really do cosmetic fixer BRRRR's here because you won't have cash flow and will probably be in the negative with the cosmetic fixer price points and current interest rates. Unless you put a ton down but then you're tying up more of your money and that defeats the point of the BRRRR. Yes this is the issue with the AMC appraisers I've noticed, they are randomly pulled, some of them don't know the area well, have little experience and yes the ego effect FOR sure. In what other industry can you do a less than 30 minute inspection, use computer algorithms to calculate your comps and appraisal (they can't be spending more than an hour of solid work on the report when the computer is doing most of the work) and get paid $600+? So let's say the travel time, analysis, generating the report takes 3hrs max, that's $200/hr. I work in healthcare and a lot of the doctors I work with who are saving lives are not even getting paid $200 per hour, why should appraisers make that? It's a ridiculous scam. Like I said before also, most won't vary their comps even though they are using year-old comps and unrenovated comps, comparing apples to oranges. They are so focused on finding comps that are exactly the same sq footage and the recency of the comp and condition of the home goes out the window. They also severely discount for older homes, which doesn't make sense if you have completely renovated and done new plumbing, water lines, new roof, etc., the age of the home should not hold as much weight as they give it. They aren't incentivized to slash my property's value, but they are incentivized to be conservative and defensible to the banks and they are using my purchase price as a benchmark, and won't appraise too high above my purchase price (and like I said we buy distressed off market houses with very low purchase prices), one of the appraisers straight out told me, well how am I supposed to justify such an increase in value to the bank? They know the bank might auto reject it just based on the value difference so they don't want to deal with it.
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Dustin TuckerBusiness Member
Lender · Savoy, TX · Member since 2020 · 195 posts · 80 votes
3w
Soft refinance appraisals after a rehab are one of the fastest ways to trap capital. ARV is a planning number; the appraisal is the financing number. If you sized the bridge to the dream ARV and the takeout comes in 10–15% light, you can be stuck with a balance that won't fully refinance and equity that only lived on a spreadsheet.

What I tell investors before they bid: model ARV, ARV−10%, and ARV−15% next to purchase + reno + cash to close. Keep the rehab scope tied to comps an appraiser will actually use. Have a dual exit (sell if soft / hold-refi only if coverage and LTV still clear the bridge).

If the appraisal already missed: don't treat the first report as the final word. Get a new appraisal ordered through a different lender — new AMC/panel, second look at comps and completed scope. It's not a guaranteed higher value, but it's a real second opinion before you accept a cash-in refi or a discounted sale as your only options.

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