Once we know how much it’ll cost to get the home repaired then we must find out what it’ll be worth after the repairs are made, if any. We’ll be getting what’s called an appraisal based on the “after repaired value”, sometimes called “subject to” improvements. Before we buy this property, we want to know the true value based on an appraisal. I show you in my Ultimate Buying & Selling Machine home study course how to find the right appraiser to work with.
You want to find one that is familiar with investment property and one that’s fairly conservative. You don’t need a fluffed up value of your property only to get stuck in the property when your buyer’s lender orders their own appraisal and it comes in much lower than yours.
In my Ultimate Buying & Selling Machine real estate course you’ll find a copy of a Brokers Price Opinion (BPO). This is a form that realtors use when contacted by banks to give them an estimate of the property value. By having this you’ll know what the brokers look for and you’ll be able to negotiate better deals when you find discrepancies in the information presented to the bank by the realtor.
Here’s a quick and easy method when looking at an appraisal to determine whether or not your lender or underwriter will have a problem with the appraisal. When you get an appraisal on a property, I want you to look at the pictures in it. Look at your property and the comparable sales. Pick out the house you’d LEAST want to live in. If there’s a noticeable difference and it’s YOUR house then the underwriter will definitely have a problem with the appraisal. The definition of a comp is a comparable sale with the least amount of adjustments.
Now you’ll have a jump on your competition. This is great to use when someone is trying to sell you a property and they already have an appraisal. Just take a quick look and determine if it’s a good appraisal or not. Remember this is just a quick method and is not a definite way to tell if you have a good appraisal. There are many things the underwriters look for such as the gross and net adjustments.
I’ve also included in my Ultimate Buying & Selling Machine home study course a checklist that we use to review every appraisal when it comes in. This appraisal quality control checklist will help you to see what every lender will also be looking at so you’ll know when you have a good appraisal or not.