Because I am so heavily involved in real estate investing I have found myself on dozens if not over a hundred mailing lists from real estate agents with whom we work, have worked or may one day work. I do not have time to read them all but I do scan them for opportunities which jump off the page. Today the one that most jumps off the page comes from one of my favorite brokers who sent out information for her office.
CONDOS - SANTA ROSA BEACH - APPRAISAL PROVIDED
Really? Appraisal provided? I'm sure when this particular broker sent this she didn't mean for it to come to me with that subject line. Why?
Break It Down
Which party would have the most interest in an inflated appraisal? Right! The Seller.
Which parties "may" turn their head to an inflated appraisal? Right! The agents, the loan officer, the mortgage broker.
Which party would not be happy with an inflated appraisal? Right the LENDER and "should be" the buyer. It amazes me how many times buyers are so proud they acquired a property "below appraised value" and even knowing that it was not their appraisal they bought on. Get a clue people!
So here is another reason you are seeing more and more review appraisals. First off you are an idiot if you purchase a property using the seller's appraiser/appraisal. Secondly don't think for one second this may not cause the deal to bust when the lender does a desk or field review.
In this current time in real estate financing expect an appraisal review (also called review appraisal) either a desk review or full field review. Do not freak out when it happens and don't do what one intelligent investor did - we slashed the appraisal value with one of our field reviewers buy about 30%. The buyer went to the bank, took out a HELOC and paid for the investment with his HELOC. That was two years ago. It has been vacant and on the market since. He overpaid for the property because he let his emotions rule the transaction.
How To Avoid Problems
Use a lender approved licensed appraiser. Make your offer subject to appraisal. Let me repeat this so you are sure to understand, lean really close to the screen and make sure you see these words:
IF YOU BUY A PROPERTY USING THE SELLER'S APPRAISAL/APPRAISER YOU ARE NOT SMARTER THAN A FIFTH GRADER.
Ken Cook - Georgia - FHA, USDA, VA and Conventional Home Loans (678) 439-8683
