Looking for Hard Money Lenders That Don't Require an Appraisal

Detroit, Michigan
Private Lending & Conventional Mortgage Advice
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Looking for Hard Money Lenders That Don't Require an Appraisal

Derrick Reyes
Real Estate Investor · Las Vegas · Member since 2015 · 22 posts · 18 votes

Hello! I'm a new investor getting started with BRRRR in the Detroit area. I thought I had found a couple lenders who would do fix and flip loans with new investors. However these lenders still require an appraisal, contractor estimates, etc. before closing. That means I can't use these loans to make cash offers which severely hamstrings my ability to make discounted offers. Is it possible for a new investor to get a hard money loan that doesn't require an appraisal? If so, any referrals are greatly appreciated. Thanks!

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y
Quote from @Derrick Reyes:

I am finding that the answer to the question "Can I use HMLs to make a cash offer." is No. 

The answer seems to be that HMLs are in between conventional loans and all cash and should not be sold to sellers as a "cash offer". They have advantages such as quick closing and qualifying based on the property, but often still have contingencies in place. 


U can make a cash offer and simply have no contingencies for financing so you risk your EM if you dont close. But then a sophisticated seller is going to want proof of funds but most sellers are not that sophisticated.. other wise most wholesalers would never get deals.  Everyone of them says they are cash buyers when in fact very few really are.
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  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    3y

    We are getting appraisals back in under 1 week. The market is slow, appraisal volume is way down. Even with a full inspection most HM lenders can close your file in less than two weeks. The appraisal also protects you from entering into a bad deal. @Derrick Reyes

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  • William Graham
    Lender · Little Rock, AR · Member since 2023 · 33 posts · 9 votes
    3y

    As a private money broker, I can say the appraisal is the main thing we will look for to determine if this is a good deal, primarily since we use the property as collateral for the loan. I would think you would want an appraisal to determine if the deal is good prior to getting financing. While we have pulled credit reports, they are used to determine the risk of repayment more than the approval of the loan based on the credit score. 

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  • Issac San Miguel
    Lender · Austin Texas · Member since 2022 · 319 posts · 156 votes
    3y

    You can still write a cash offer but require an appraisal.  They are coming back quickly with the slowing market.

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    6h

    There are Fix and Flip lenders that do a virtual appraisal, however you still need access to the property. You also need clear title to close on the loan.

    I would recommend looking into a HELOC and buying cash instead.

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