All Forum Posts by: Patrick Britton

@Clayton Howard have a chat with your dentist or doctor about the possibility of getting loans from them. A former client and home builder of mine had his own dentist provide financing, and used the funds to build 6 to 10 houses a year.  

@Account Closed while the "selling to myself" is brilliantly creative, you're going to give your loan officer a stroke trying to navigate the plethora of issues likely to come up.  

I think that if it is about getting as much cash out as possible there are some interesting ways where you can get most of your equity out but the complexity and logistics involved would be so considerable that it would create a whole new slew of issues and questionable outcomes. In other words, the medicine you take for the disease will kill you.

Perhaps you could find he trusted family member who owns their home outright and could perhaps offer you the funds they get from a heloc they get on their own house? I had a family member lend me $250,000 for real estate acquisitions that he was able to get from his $500,000 house he owned outright.

But hands down, you got a big gold star for that financial creativity :) in fact, it's possibly worth mentioning to an attorney and a loan officer and get their feedback. 

@Nate Grabner with all due respect to brandon turner and the like, Chitown is unique.  And the info from any printed book is likely very generic or out of date.  Unfortunately, real estate these days requires info that's current and hyper-local.  The Straight Up Chicago Investor Podcast should be the primary course of your info for the next while.  As well, reach out to a PM, like @Mark Ainley when you're able.  

@Frazer Joseph Gibbs Frankly, i dont think there's anything to what @Minna Reid said that anyone could add to.  She hit that ball out of the park!  

What I will add however, is that given what you know now about the situation, is the property still worth it to the buyer?  Smells like a likely eviction after the moratoriums are lifted (who knows when that will actually happen) and is the buyer going to get a property as they expect?  Or is the tenant going to destroy the place?  

Some battles are worth fighting, some are not. But is the victory worth the risk of destruction? IMHO, buyers should get their EMD back and find somewhere else.

@Kevin Larson obviously, based ONLY on your story, it sounds like your lender needs to find a different AMC, or the AMC needs to refresh its list of appraisers.

What happened to you has happened to me 3 times in the past 12 months. Each time I sent the lender (who then sent to the AMC) a detailed analysis and all 3 times value was revised significantly higher. However, in 2 of those instances the lender had to send a different appraiser but fortunately, only once did it require any extra payment on my end. I should add, that in each of those 3 instances I made my grievances quite clear to the lender, also noting that there are lots of lenders and it's incredibly easy to find another one, especially these days.

And while it might sound like I simply pissed and groaned and complained until I got my way, in each of those instances I supported my claims by questioning the compatibility of the comperable properties used. For instance, one of my properties was a single family detached brick built house. for some reason, the first appraiser thought that a compareable property was a half duplex. another comperable was a frame built house. Fortunately, my knowledge of that specific area is well-above average and I was able to demonstrate rather easily, that the difference in value between a frame built in a brick built house (all else equal) was no less than $40,000 and the difference in value between a single family detached and a half duplex was at least $30,000.

While it is true that without a purchasing sales agreement in place, the appraiser does not have an anchor to which he or she could use to derive their opinion of value, it really shouldn't be necessary.  Given the astonishing difference between your humble estimate of value and the appraiser's estimate of value, something else might be going on here. And don't forget, appraisers are human beings and human beings full victim to strange biases and logical fallacies all the time. I read a story a few months ago about an African American family whose appraisal came in over $100,000 below what they were expecting. They removed all evidence of their heritage from the house and had another appraisal and voila, they got their value which, according to several Realtors familiar with their situation was truly a fair and honest estimate of value. Simply put, the first appraiser is a racist.

Perhaps this was not necessarily the reason in your case, but perhaps there was something else about your house or about you or about the lender or about the day in question of the appraisal that set the appraiser off. These days, most appraisers are totally strung out and under constant pressure from lenders, investors and worst of all, Realtors representing first time homebuyers! 😊  

Also note that after your request for a review, value went up 40%. To anyone with at least one eye open, a 40% increase in value from a review isn't reasonable. Clearly, there is something horrifically wrong with the initial value.

if I were you, I would find a different lender. Of course, I am under the assumption that your property isn't in an area that saw a massive decline in value over the past 12 months. Although rare, it can happen. So in my humble opinion, before you threaten to leave this particular lender and find anybody else, I would do a little bit of research, be honest with yourself and with the property and if you are still on the right side of right, scream and shout until a change is made.

As someone else here said, it is extremely difficult, if not totally impossible to get a refund of your money. But given the substantial difference between your estimated value and even the revised estimated value, I wonder if the appraiser actually set foot inside the property...

Lastly, just be sure that if you are going to scream and shout at the lender that you have loads of supporting documentation and evidence on your side.  This is where having a realtor buddy will help a bit.

of course, you could always hire your own appraiser, just know that the appraisal generated by that person will not matter to the lender.  But it could shed some insight on where the first appraiser went wrong or if in fact, you are the one making a mistake.  Yes, this would mean yet another $650 but frankly, considering how this could either make her break your deal, I think it is worth serious consideration.

good luck

@Po Chan  my (relatively) limited understanding of issues plaguing appraisers these days has to do with turnaround times.  Essentially and thanks in large part to ridiculously low interest rates and unbelievable demand, appraisers are being forced to produce perfect reports in very short periods of time.  This pressure, like an pressure, will cause issues.  Based only on my understanding of your issue, the appraiser could have been under a lot of pressure, made a bona fide mistake, but instead of correcting it is either a.) too busy to care or b.) unwilling to care due to the advanced notice requirement.  Of course, there's the more likely possibility that this is a full scale mistake.  There's no way a comp from nearly a year ago should be used at all, no matter the condition.  Look-back should be no more than 6 months.  

Since you said this appraisal was for a cash out refinance, i have to assume a lender is involved. Based on that assumption, it's also reasonable to assume an AMC was involved.

If i were you, i'd speak with you lender and ascertain what they think they best course of action is to take.  And gently remind this lender that there a lots of other lenders out there, and you'd hate to have to go somewhere else in order to get a new appraisal done, just because an appraiser made a mistake.  

BTW - i tried to get a cash out refi with US Bank a few months ago. Value came back at $110k. All the comps were inappropriate. It took a while but they eventually hired another appraiser and value came back at $168k. this is all in the span of 4 weeks. Unfortunately for US Bank, I couldn't wait, and went with a commercial lender whose AMC hired another appraiser, and value came back at $170k.

Now, while appraisers have been known to make mistakes, it's very important that you not "abuse" them.  They are already under a lot of pressure and don't need yet another borrower yelling at them, even when they are wrong.  So in short and IMHO, tell your lender to fix it or you'll be gone forever.  But perhaps use less confrontation verbiage than I've exampled.  :) 

@Jovann Thompson OOS investing is super easy.  hardest part is the remote closing.  

@Jorge Vazquez hell, most realtors can't spell their name, tie their shoes, complete a sentence, or be anything but greedy, selfish, wanna-be professionals. 

@Sarah Brown  he said "most."  not all.  MOST.  

@Paul S. i wouldn't broadcast your business model like that to the OOS folks...and from what i can tell still, detroit could serious use the money from outside of the state.  

To those who were able to become appraisers since 2019, how did you go about finding a mentor?  Did you do the 75 (or more) hours before you lined up with an existing appraiser?