Danny Regalado explains how you can avoid lowball appraisal offers, from what company appraises the property to you providing an itemized list of upgrades.
Danny Regalado shares some tips on setting yourself up to get an appropriate appraisal from the beginning. You want someone experienced in your particular county who knows the value of the properties.
Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Danny: Hi, this is Danny Regalado and I will be your host for the REI Classroom. Today, we’ll be talking about how to avoid low-ball or inaccurate appraisals.
Mike: This show was sponsored by passiverental.com.
Danny: One of the biggest problems that we have in our industry is low-ball and inaccurate appraisals. There are many factors that are involved in this. One of the main reasons is the use of appraisal management companies. Many lenders after the housing crisis went to these appraisal management companies. These appraisal management companies are large organizations that hire many different appraisers all over the nation. Most of the appraisers that work for these companies are inexperienced appraisers that recently were certified.
The problem with using these appraisers is that they don’t have the experience that the local experienced appraisers. Usually, they like to use these appraisers to get them at a lower cost and it’s more cost effective from a business perspective. But the problem for the consumer is that the appraisers that actually come out to the property are usually not as experienced and not as qualified and local experts as your normal experienced appraiser would be.
Some of the other things you can do to avoid that is to ensure that the appraiser that comes out to the property is from the same county that the property is located in. One of the other things you could do to avoid a low-ball or an inaccurate appraiser is to ensure that the appraiser that comes out to the property is from the same county that the subject is located in.
One of the largest problems that appraisal management companies have is the lack of appraisers. Thus, they use certain appraisers to cross-county coverage, meaning that they’ll use one appraiser to go to three or four different counties, though they may not be experts in that particular county. The problem is that certain specific qualities of the neighborhoods get missed because of the appraiser not being a local expert.
Another thing that you could do to avoid inaccurate appraisals is to provide the appraiser a list of upgrades. A list of upgrades helps the appraiser gauge the idea of how much work went into the property. And thus, when giving them a list of everything that went behind the wall, like electric, like insulation, plumbing, gives them a better idea and a better scope of the amount of money that was spent on that particular property.
Another thing that you could do to help get a more accurate appraisal is to provide the appraiser some comps. If you go onto a lot of the public record sites, maybe the county appraiser sites, and pull the most recent comparables, then you can provide the appraiser an idea of where your thinking is on the property. A good appraiser will take all that information into account. They may not solely rely on it, but they will look at it, and analyze it, and see if it’s relative to the appraisal.
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