I’m subscribed to other real estate you tubers as well as Phil, and mr Pustejovsky here isn’t flashy and isn’t critical of other channels. He’s one of the most straightforward and generous creators in terms of useful information I’ve seen. He’s dropping essential knowledge that’s easy to understand with a clear intention of educating. Thank God for you Phil. You’re doing amazing work.
I stumbled on Phil's page years ago, a complete newbie to real estate. I literally would put the kids to sleep and stay up binge watching his videos, drowning my self in as much real estate knowledge as possible. Now here I am years later, an active investor and licensed agent and can't help but smile when I watch these videos. It reminds me how far I've come and how God used Phil's content to change my trajectory. THANK YOU PHIL !
I was just thinking this morning about how to figure out the price for a house we have put our eyes on. I open RUclips and I see Phil’s video. Can’t be a better timing. OR RUclips can read our minds lol Thank you for the wealth of information on this fabulous channel!
Thank Phil your vide was right on time. I planing on refinancing, was about to start alot of changes to the house, when you said the refinancing is for repairs I'm not sweating the appraisal. The house is neat and clean, I was ready to changes sinks painting. I just make sure the house is presentable thanks.
That's wonderful news! Save those renovations for after the appraisal. Also, NOW is the time to get an appraisal because closed comps are higher than active comps in many markets.
Wow, I was literally watching this video as my lender calls in to tell me my appraisal came in at 135k, house is being purchased at 132k. It’s a foreclosure that was just purchased last year for 165k and appraised at 185k, tax assessed at 178k. I never make comments but just thought it was funny because my appraisal wasn’t supposed to come in until the end of next week. Great timing Phil lol
As an appraiser with 35 years experience, I bring the value in at market value, not purchase price, and simply explain in the appraisal the circumstances surrounding the purchase, i.e. buyer is making a prudent purchase at below market value for xyz reasons...not rocket science, and as long as the appraiser explains what they did and why they did it, no problems from underwriters
Great information! I recently had a mortgage application denied in final underwriting on a 2nd home. I believe it was due to a mistake the underwriter made in interpreting a Fannie Mae requirement. Anyways, they did everything to avoid formally transferring the appraisal to my new lender which required a signed document from their chief loan officer. The lender would not sign it and I lost $675. To me this seems like poor business practice and honestly it should be illegal. Phil, you’re videos are great. Keep up the good work.
Our first buyer fell through, underwriters would not approve their loan. We had asked 589, they offered 595 and it appraised at 595! The second time, we asked for 595,000, they offered 595- and the appraisal came back at 550,000!!! Killed the deal! No room for negotiation. In urgency to sell, we lowered price $20,000. In escrow now. 🤞🏼wish us luck. 😅
Hey Phil.. I just want to say thanks for all that you share. Your definitely the truth and the signal.. I have a quick question. What if your negotiating an off market deal. You offer the seller a low price based off your calculations as an investor and the condition of the house, but the owner thinks there house is worth substantially more. Would you at that point tell the appraiser the purchase price. Not trying to swindle the home owner out of there property but just trying to justify your offer price?
Use comparable sales and renovation costs to justify your offer. If you get an appraisal, that would come after you have negotiated a contract with the seller.
A property may be large (.8 acre), across a street from a lake, have a 24 X 48 extra block garage and a homd with hardwood floors, but unless a buyer cares about all of those features they aren't willing to pay for them. Men care about the garage shop but not the lake or extra yard.
As for myth number 2. As an appraiser I ask for the Contract of Purchase and Sale to review if there are any terms or conditions that would effect the purchase price. If the lender says no to my request then I document that in the report that I asked and my request was denied. Then the loans officer can deal with their bank auditors when this comes up. If an appraiser is selecting comparable sales to justify the purchase price that is against their appraisal institutes standards and the appraisal should be sent off to their governing body and they will investigate your claim and if this is found to be the case the appraiser will face disciplinary actions that may include fines and educational courses that they have to undertake. The appraiser is to select comparable sales that are the most similar in physical and locational aspects to the property being appraised. If an an appraiser is not doing so and is diving for a number it is very obvious in the report. I have reviewed hundreds of appraisal reports and when this is the case it is extremely obvious as the adjustments are not logically and consistently applied. It is glaringly obvious. Toss the appraisal and get a different one or have another appraiser conduct a technical or market review of the appraisal. When I am doing an appraisal for a sale I will state in the report the market value range for similar properties, if the purchase price is within that range I will then communicate to the lender, after concluding my tests on value, that the accepted offer to purchase is fair, equitable, reliable and reasonable for first mortgage financing. Sometimes such as in a hot market I will explain that the property sold at the high end of the value range. Or in a declining market that it sold in the lower range but the sale price still lays within the market value range and is still reliable for financing. The lender is the underwriter not the appraiser - if you disagree with the appraisal - then don't lend on it. Myth #3, what you are speaking about is marginal diminishing returns. The problem is that three comparable sales will not necessarily show this on a price per square foot basis due to adjustments such as surplus lands, inground pools, tennis court. The comparable sales show a range of per square foot rates but this should be cross checked against the time adjusted historical sales of the subject property as well as the median price of similar homes in the neighborhood. The price per square foot indicator may only be used as a cross check to the value conclusion which is determined through the Direct Comparison Approach. It is NOT acceptable for residential properties to conclude market value by a price per square foot. That's a BIG no no. If you have a report such as this, then send it off to their governing appraisal body and they will investigate your claim and their professional practice committee will rip a strip off the appraiser's back. If you are a lender and have issues with the appraisals - then don't use that appraiser! That's how you get rid of bad appraisers. The other way is to sent their report off to the governing body. The other way is to sue them in court for any damages you have incurred from relying on the appraisal. I will pay for the stamps.
Myth #2 a bit off (hopefully). An ethical Appraiser receives the Purchase Agreement and has the sales price as just another piece of information as potential Market Value. If the most recent sales do not the support the agreed price the appraisal will come in lower. This happened on 22% of my residential appraisals in 2019. 60% of these were FSBO (Fore Sale by Owner) where a Real Estate Professional was NOT used. In every case when my data doesn't support the Sales Price I asked the Home Owner or Real Estate Agent to provide their market data used in pricing the home. This is a courtesy to gather more information. FSBO's have no data to provide because the number was made up or they give me a print out from Trulia. I usually find out when Agents send over data, it is cherry picked sales out of the subjects neighborhood or much nicer homes where better/closer/more recent data was ignored. In some cases the Agreed Sale Price is the best data for Unique Homes and the Appraiser just simply supports the conclusion that the sale price appears reasonable based on available data in the area. As an Appraiser I am paid to provided a True and Credible report to the Lending Institution so they can ultimately make the final decision to loan money on the property or not. Sale prices for home can be inflated for nefarious reason such as including cars, farm equipment, in 1 case 15 acres of recreational land included in the sale price of the home (city) to avoid paying for 2 appraisals and deceiving the bank. I can only speak for my self and a few other Appraisers in the area, but we have similar war stories and my findings are not unique.
I've always thought that the appraiser knowing the "strike" price of a sale was a serious biasing factor in a loan-fueled transaction. The biggest source of bias, IMO, is the desire of the appraiser to get more and more appraisal orders (eg; continuing business) from the ordering bank. This is from my grand experience of 2 RE deals, LOL, one of which was owner financed and she knocked $100K off the $400K-425K price she had been asking....to the point where it was completely impossible to stand by and not buy it. Even though it took every cent I had. The worst RE mistake I ever made was selling that building. I left 2x the amount of money on the table than what it cost to buy the building. Horrible!
20 years in the business. Maryland markets. I like the complex properties water fronts big lots etc. you can charge more money and get longer turn times. Condos and townhomes get boring.
You're a beast sir... I've watched over 100 videos on real state purchase and every video more or less has the same content except yours.... Every one of your video has something new that others do not share.... Really great stuff
If you paid for an appraisal and they refuse to provide it then you paid for a service that was not rendered and could potentially file a chargeback. Check with your card issuer.
Warning. Appraisals are not a true reflection of what it cost to build a house (excluding the lot/land valuation, which is easy). There is more thought given to a value of a used car than an appraisal. Appraisals are what lenders want to pay for a house. Appraisers are not what you would assume. Architects should be hired for appraisals; people that can recognize quality or not, but lenders don't want experienced people assessing houses. Appraisers only have a few months of training at best. I dealt with four different appraisers on one project in the Charlotte NC area. None were competent. As I was walking around the project with one of the appraisers, they asked me "what kind of flooring is this" (in a bathroom); it was peel and stick vinyl; I laughed thinking it was a joke, but then I sobered-up real quick when I realized they were serious and were ignorant. Another appraiser thought that granite print Formica was actually granite. I will ask you a question: Why is it that you don't see real front porches on houses anymore and you only see "McMansion" style faux porches on houses? Because lenders won't pay for a real porch; so appraisers appoint no value; that's why. I almost made the foolish mistake of getting a Masters degree in Architecture. Luckily, I encountered the "industry" before pursuing that, which changed my mind.
Always great stuff Phil. Watch often but don't comment. I'm learning too much. A couple of points. The consumer is legally entitled to a copy of the appraisal. They must be sent out within 3 days of receipt. However, most lenders won't accept a copy done for another so you may end up paying for another one anyway. You nailed it on the bias of a purchase appraisal. How can the appraiser ignore the sales price listed right on the contract they are required to have a copy of and also when they check the MLS listing. An appraiser friend of mine once told me just what you said. The true value of a property is what buyer and seller come to agreement on. Very important however, that it is an "arms length transaction". The parties don't know each other. On a refinance however they are flying blind. Which is so why so many refinance transactions crash and burn when equity is tight. Appraisers will go conservative as they don't really have to answer to anyone on their "opinion of value". (That could be a whole other conversation). One reason purchase appraisals come in so close to purchase contract, hopefully just above, is that if the appraiser finds easy comps to justify the contract price, they won't go out of their way looking for more comps to see just how high the value may truly be. Their only obligation is to insure to the lender that it is at least worth what the buyer is paying for it. My biggest issue with appraisals is actually two fold. First, the appraiser is signing their name to it stating it is their opinion of value. BS. Their opinion is shoved down their throat by the comps available. That same appraiser friend also once said, if my professional opinion of value on a house is $xxx, but I don't have the comps currently available to back it up, my opinion is worthless to the lender. The other issue is why lenders are so micro focused on today's one day snapshot in time value. i.e. a purchase contract for $250k and an appraisal at $248k. The deal crashes and the parties have to redo the contract. How about CLOSE ENOUGH! Last month or next month the comps could have that value at $255k or $245k. What the lender should really focus on is what will it be worth down the road if they need to foreclose on it? That's when the value really matters. The entire lending industry, of which i'm a part, is completely a smoke and mirrors house of cards. From FICO scores to appraised values to monthly debt ratios.
hi phil. just wondering: in another video you explain what intrinsic value is, and you also mention in it that you have never purchased a property for more than intrinsic value. are you suggesting that it is never a good idea to purchase a property for more than intrinsic value? or, have you never purchased a property for more than intrinsic value due to where you live? but you otherwise would do so, perhaps, if you lived somewhere else more bubbly? thanks for this appraisal video, and hope that you are doing well. sincerely, matthew
For short term flips that you have little to no risk; the intrinsic value doesn't matter. But buying real estate for long term rental purposes; I won't buy a property, ever, above intrinsic value.
As an appraiser, I would like to add to point number 1. We CANNOT give the appraisal to the homeowner when the mortgage company orders it. The governing rules upon which our license depends, PROHIBIT us from giving the value to anyone EXCEPT those who order it. It isn't that we don't want to - we are not allowed to.
I've just hired some more people to help me with delivering more content for y'all. Hopefully, Lord willing, you'll see an uptick in the coming months of more and more content. Thanks for the comment
As an appraiser of over 35 years, I think he's perpetrated some myths of his own. I'll start by saying it depends on the quality of the appraiser to begin with. Can a less than dubious appraiser manipulate the numbers, you bet. Then it depends on the definition of market value being sought/requested and the purpose of the appraisal. Get any of these wrong and may not get what you're looking for. Further, his explanation of the adjustments indicates he does not have a command of the appraisal process. He's mostly spot on on #1. #2 has some truth, but again it depends on a lot of things. All that being said, if you're a flipper, you want to know market value when you are ready to sell. When you're buying you have to pay below market value. That's where your profits are. Without specific instructions otherwise, the appraiser is going to give you market value and that might be what you need to know.
It reminds me of what Bill Clinton said, "...It depends on what the meaning of the word "is", is...". There is only one definition of the market value, regardless of its purpose.
You are mistaken. I’ll bet I know more about appraising than you. But that’s not what’s important here. What a flipper needs to know is what can they sell the property for when it’s finished. Take that number, back out how much you need to make and how much you have to spend to get it ready including holding cost , that’s the most you can pay for the house. Otherwise you just walk away. Pretty simple. Ideally you don’t want to be the most expensive property in the neighborhood because that makes it harder to sell. I avoid homes with adverse site influences for the same reason.
Thank you for your knowledge. I've been owner financings(rent to own)my remodels with a one year warranty, 30 years at 7% with as much down as i can get. BUT... none of my customers have ever asked for an appraisal. Should I be providing one upfront anyway???
Man this is one epic video, thanks Phil! One question, I know that you covered Rental Properties, did you do a video on BRRRR (Buy Rehab Rent Refinance and Repeat). I hear investors talking about this method a lot.
This gives me a great idea for a new video! Thanks. So the process of BRRRR is what real estate investors have been doing for centuries. Recently, that process was given an acronym as if it's a special technique when it's how almost every real estate investor has always conducted their long term investing affairs. To summarize, they buy properties with the intent to rent (rather than flip); sometimes those properties need to be renovated prior to being able to get maximum market rental rates; so the rehab work is done, and then the property is leased out, then, in order to get back some of the cash they invested (and because it's rented at maximum rental rates), the investor refinances and then they go look for another deal. The flaw in even giving the process an acronym is that the focus moves towards the wrong goal. What is most important is not following the BRRRR process, but instead, the key is buying the RIGHT properties that cash flow the best and are easiest to get the best loans so that you can optimize every part of that process. Scan through my previous videos to see the titles that best pertain to all that; such as, 3 Ways to Turn a House into a Cash Flowing Machine: ruclips.net/video/wyooI5J91UM/видео.html
@@freedom_mentor Here is the funny part, I just watched that video. Thanks for the Rent to Own idea! You're welcome, I am a watcher of your channel and have a constant hunger for learning. Flipping is a little risky for my type of investing, but I've been looking more into Rental Properties.
Good friend of mine just got caught in the new Washington rent controls law and his "safe and secure" apartment building investment he just made is turning into a nightmare for the next 6-12 months. Flipping allows you to get in and get out. Sometimes you get stuck with rentals that are not easy to resell or get out of.
I am getting a refinance on my mothers home which I live in , as a painter and a home repair specialist I thought I had a grip on what impacted a appraiser. SIR, I did not. The information you imparted was invaluable, I consider myself to have higher than average common sense and college education. It is clear now I was focusing my time in the wrong order. PS short precise, to the point and well thought. You should make a video on how to make a video. 10 out of 10!
I appreciate the comment! I've been posting videos on RUclips for more than 10 years and at this point, I have a video for just about every question I have ever been asked. Including a video on how to make a video :) ruclips.net/video/Rx2jFEThw8E/видео.html
Hi Phil, I have a question. My older client approached him and asked him if he wants to purchase their house. It’s located in Tacoma,WA it’s a 3 bedrooms 2 bathrooms. I did a comp on it and it shows $183 but she said wants to sell to my brother for $155,000. Do you think it’s a good deal? She said price is still negotiable. Property has new roofing, new water heater,needs cosmetic and probably new windows. My brother wants to buy the property but his bank told him that he’s not qualified because his salary doesn’t qualify him. I told him perhaps he should wholesale the property but I don’t know how to do the wholesale deal let alone put it under contracts. Can you advise on this please? Thank you so much sir.
I am considering going into the appraiser field (no experience). Your channel is really helping me grow faster. However I called a few appraisers in Las Vegas and they discouraged me from entering the field saying they are not sure if it's worth the time and the job Outlook is not good. Just wondering where u think the field will be in ten years?
This is my question as well. Becoming an appraiser sounds so interesting but I’ve read several times that the field is nearly impossible to get into because no one will mentor you.
Erin2002 I heard the same thing. But this is only because trainees do not think about what they can offer the supervisor. I plan on going through the the county assessor office. I also plan to work for free for a month. I am also willing to sign a 2 year non compete. From what I get from tons of research, you must make it advantageous to the mentor.
Ask an appraiser that does church appraisals. It's MUCH more than just square footage. I helped my church purchase a new building and the appraisal is much more complicated than a residential single family home.
How then if you are starting with little money to get a property, and your property is selling below fair market value and your trying to be creative with the seller, because it needs some rehabbing. So your trying to get more money out of the mortgage company to help with the purchase for the buyer, because mortgage company wont do a HELOC on the deal?
Basement square footage is usually 30% of main level from a price per square perspective, although that can vary depending on the surrounding comps. Garage space usually ends up being about the same value as the cost to build it but again, it too depends on the surrounding comps. When you compare houses that don't have a garage (and that too depends, whether 1, 2 or 3 car) versus those that do, everything else being equal, that's another way to determine garage value.
@@freedom_mentor and more importantly, does the lot have enough set backs/space to add more garage space, which is vital. Depreciated cost analysis is one way to solve, if inadequate paired market data is available..
My lender just waived the appraisal of the home that I am purchasing. Should I order my own? There is a house in same subdivision with exact floor plan that just accepted an offer after 3 weeks of listing. That house is priced $60k over the house that we are purchasing. Sure our house needs more touch ups like paint to get it to the level of the more expensive house. Would YOU order an appraisal knowing the info above? I have an inspection ordered for tmrw.
I should also call you to tell what I am looking at, Hint. 4 BR house. 1/2 acre 211 days on market. Foreclosure. $35K. Needs roof, remove overgrowth, clean, clean, clean, and paint. ARV and being conservative... $120k. Me: Over 30 years in the repair/remodel industry working for others.
Mark this day as when you decided to get your RE license. Mark the day when you decide to drop your RE license. A license (and membership with NAR) gets you access to the MLS, but online automation obviates the MLS; you don't need a license. Having a license is more of a burden than a blessing; that's my two cents worth, your mileage may vary.
@@UltimateBargains I have to wait on others to see a property. With a license, I don't. Plus I get a cut on the commission. I know I don't need it. But it helps me to be more serious about it. So far all I have been doing is talking about doing this.
Appraised a house last week with purchase agreement in hand for $575,000. Appraised at $500,000. Just saved the buyer from over paying by $75,000. They thanked me. #2 is your biased opinion.
@@freedom_mentor lol. Seriously? He can still pay $575k. He just can't use all of the banks money. Bank is not going to lend the full amount on that LTV. Not every appraisal meets contract price. It happens.
That is a very good question. Use Google Maps and look for the ones with the most positive reviews. That may be the only way to really vet out appraisers quickly.
There is a MYTH #4 . The appraised value that the appraiser put in the report is final!!!! Answer : NOTTTTTT . You can always ask for a second appraisal. and usually if between the first appraiser and second it is a discrepancy of more than 10% Variance it is time for a 3rd one . The rule of thumb is if values between 2 reports is under 10% discrepancy (as closer as better) you got there a pretty good chance for a good report. If not, get a another one. Will you agree Phil??!?!
It depends. Assuming that all the appraisers are anchored to a sales price (in the case of a purchase) or the needed amount for a successful refinance, the appraisal amount will be predicated on the comps the appraiser selected and the adjustments that were made on those comps. Sometimes, 10 different appraisers will all come to very, very similar results, if there are only 3 comps in the area and they are all identical. However, if there are 6-10 comps that an appraiser could use and they are all very unique so the adjustments could swing the end result in one huge direction or another, then it could be very, very different results. In some cases, I'll direct my Apprentice to demand (or pay for) a second appraisal. In other situations, I know that it won't be any use to do so.
@@freedom_mentor i Agree with you . It is still good to have the "myth" clear, that if you are not happy... There are chances for a second or... more, Opinions. And just like you said, if you feel is worth it ... You can do it. I do a lot a reviews for reports... And sometimes you will be surprised about the poor quality that some appraisers can put into as work. By the way, I am listening to you since 2012. "I listened to like an 1h audio..where you tell about your start up and how you were living a the mobile home..." good stuff. I try a few times to get in touch with you (including passing by your miami Beach ups address) ...still thanks for your reply. Peter . Appraiser/investor in SE fl. Thank you
Not a problem in most cases. Always ask for it. They may not give it to you, but you can always ask. And they won't let you pay the appraiser directly.
Hello, thank you for you video. I have a question. We are looking to buy a commercial building in a small town and we had the bank order an appraisal before making an offer. Real estate agent said that is illegal. Is this true?
I have no idea what that agent is reporting as illegal from what you have shared. You can order and purchase an appraisal for any property at any time. The one drawback to getting an appraisal on a property you don't have under contract is that the property owner may not allow your appraiser to access the interior; which would prevent the appraiser from having confirmed measurements and other details about the interior. But he could still do a really helpful appraisal even without interior access.
@@freedom_mentor thank you so much for your response. So from that realtor was some kind of trick to put us in some kind of corner. I don’t feel anymore to trust her. But I don’t know what I can do. The hall cycle was started, we saw sign on the window: for sale. We want that building. We try to find the owner , call him, but couldn’t. He was not with any realtor. We called randomly to our local realtor and asked about that building. One of them found his number and connected us. What is not so feel good that the person who sales the building sign contract with this realtor. Don’t know my options. Should I ask another realtor to help us to do the cycle , from our side? Because I don’t want this lady ( trick realtor) on both sides. If she did something weird, she might do something else. A appreciate very much if you answer. Also I want to sale our house and I don’t know ... should I try to sale myself? Or it will be better find realtor? But our realtor companies are so concerned to each other, because small town.
FHA Appraisers do have to assess certain details of the property beyond a Conventional Appraisal but the end Appraised Value should be no different whether it was FHA or Conventional
I purchased a house two years ago the appraiser went to my house they did a new kitchen I’ll post a head arm eight circuit breakers him but I was supposed to have 30 of them the M had a fuse box that’s all him didn’t know how old it was they didn’t change anything who is liable for that
As an a certified appraiser, #2 and #3 are not entirely accurate. Do I frequently appraise properties for the sale price? Sure, but if that number is supported by market data and was typically exposed to the market, etc, then it’s a fair representation of market value. But I have been both above and below the sale price on MANY occasions and have not lost clients because of it. I also never know what the “target” is for a refinance because none of my clients share that information, as they shouldn’t, and I never ask a homeowner what number they are needing for their loan to work. All of that said, there are those appraisers who care more about making their clients and borrowers happy than they care about producing credible appraisal reports. #1 is spot on... and don’t call me angrily and tell me you paid for the appraisal!
Thanks for the info phil is very helpful,but I still have a doubt on how many times will I need to pay for an appraisal before I buy my house..at what point of the process it is good to make an appraisal??
"Make" an appraisal? I'm not quite sure I understand your question? Are you asking me "when" in the home buying process you should "order" an appraisal?
Just confirm ahead of time that you get a copy of the report. If not, go with another mortgage lender. If they say "No we won't provide it to you", take your business elsewhere if that matters to you. Mortgage brokers can source from all sorts of places. Surely one can find you a lender that'll share the report.
Thanks for the signal Phil I try to tell my clients this all the time as a lender because they still think appraisal value is market value it’s been the bane of my existence lol It’s all about appraisal timing strategy with comps pending, and sold, and what will sell soon.
Thank you for what you do sir. I'm working a deal in Columbus MD, sir the property is free and clear paid for, my offer is $270k with $30k in repairs the seller rejected my offer due to tax rates based on a $350k appraisal im not understanding how do I over come this? Please respond asap the arv is $411k thank you sir.
Do you know the Seller's basis? Is it $0 because he inherited it? Regardless, you could make a creative Land Contract offer so that the Seller does not incur a taxable event. There's so much you haven't shared which could help me with my answer and it's too complicated to cover it all in this message box so I wish you all the best.
@@freedom_mentor Mr Phil thank you so much for responding, why this is important so many that put out info never respond, for a man such as your success to respond mean so much. The reason for this late reply is I just lost the love of my life of 30yrs and my only child a son 24yrs old a week a part to the virus. Its the hardest thing I have ever gone thru and every day is a challenge. My business is my medication it was shut down. Now its like I'm a newbie starting it up again whats so surprising sir is vendors and funding is treating me as a newbie because my credit and income took a big hit and it didn't matter about my situation but was heart breaking how parts of the industry has turned there backs on me. Now about the deal. The owner is retired from our gov NSA lived in the property for over 30yrs property is paid off. Wife is ready husband is concerned about money lost if he accepts my $270k offer when appraisal is $350k approx $80k loss as they see it. Sir help me understand what other info can I provided you with to help me provide a service to help this family. They are wanting to leaving area and use money from sell to purchase new home. My offer i feel is maxed at $265-$270k with $25k-$30k in rehab. With Arv of $411,600 with Ave sold price for area $453,625. I'm working this virtually im in Oklahoma city they are in Maryland. Thank you sir once again Matthew Mitchell www.loyalty-house-buying-investorfunding.com Loyaltyhousebuyinginvestments@gmail.com
Not true with VA Loans. buyer pays for appraisal and even if one switches va lenders, that va lender who ordered it MUST give up the va appraisal which is good for 6 months on the home. I did it. AlSo, if a buyer already paid for the va appraisal, but does not close, it is still there in the VA system for any other va eligible buyer for that specific home.
Entire real estate process is trash. From mortgage, to appraiser, to inspectors, to home insurance, to title insurance, to realtor commissions, to all the extra unnecessary bells and whistles that want to simply extort the Consumer on a large purchase.
I think the word you are looking for is "Arrogant" for a appraiser to think he is that good or godly that he somehow they extracted enough information out of the market to make to make that call. 1.1% determination on a home with a median value in my area of $260,000. I agree that would be silly. 17 year appraiser. Can you imagine trying to defend that in court or in front of the Appraisal Board? 5%, I may dig in my heals if my data is real good.
Myth number 1 . yes, the lenders they do own the appraiser report , but you have the right to get a copy for the very fact that you paid for it (federal law). No you can not use it to other mortgage company true because it is certified to that particular lender, but you still have the right for a copy. The usage vs the right to have a copy are two different thing. Lenders must inform mortgage applicants of their right to the appraisal report, even though they are not mandated to provide automatically. Myth 2 ...you have tons of crooked or badly trained appraisers in your area...lol... yes, sales price influence, since if there is somebody willing and able to pay that must influence, however, if market reflects some different that sales price can be completely ignored and it must be detailed in the report. We are not in 2004-2005 when appeasers were pushed by lenders to hit numbers and if they do it is not a truly valid report to start with. Myth 3 property can be appraised for higher value than sales price, if sales price is lower than market vale it means generally either a distressed sale or not an arms length sale . If seller needs to relocated and he sells a property $30k under market value, that sale is not an arms length sale and it does not change market value. The square foot adjustment is vary due to the fact what is the general size in the neighborhood. There are such thing as over improvement that can be either condition , size or features. that might demand minimal or no adjustment, in extreme cases even a negative thing on the report.
I appreciate your comments (Appraiser 17 years). Like you, I could have written a book on this video. Not to disagree or bash it but Myth #2 and #3 are very deep and complex topics that maybe only an Appraiser can appreciate, witch I do. Have you ever been asked a "simple" "general" appraisal question by a home owner and after 30 seconds of answering it their eyes have glazed over and your are disappointed because you are just half-way through point number 1 of 40. We know way too much to ever explain to the layman in a short answer. I have had banks ask if I could call and explain my findings to the disgruntled home owner. My response is, " with your written permission I will but my guess is this is not going to end well". I call the home owner, introduce my self, give them my email address and ask them to send over all over the market data they used to reach their value conclusions and specific disputes in my report. I tell them no conversation about your home value until I receive their market data. Guess what, I have never received the data, therefore never had a conversation with a homeowner. Learn that one from an old appraiser.
Phil 😑 not true. I can send you emails and screenshot of myself and partners being able to move fha Apprasial report to another lender /loan officer. You give out rich information most times however occasionally you give wrong information
Good call on FHA appraisals. They stay glued to the property, not the borrower. Which is both good and bad. Thanks for the comment. (I guess I was focused on the Conventional side with Myth # 1)
There is a difference between "market value" (which is a prediction of what a property will sell for under normal conditions), "appraised value" (which is what an appraiser will appraise it for) and "value" (which is a subjective figure based on what at least one rational person is willing to pay for it)
@@freedom_mentor My only issue is that if one doesn't like an appraiser's initial valuation, a second appraisal by someone else will often yield a different value, hence being subjective.
Here is the definition of Market Value that most appraisals are based upon. Read it carefully and see if "what someone is willing to pay" is in there......."Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: buyer and seller are typically motivated; both parties are well informed or well advised, and each acting in what he or she considers his/her own best interest; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."
Every successful real estate investor has a mentor. Get your mentor here: www.freedommentor.com/apprentice
I’m subscribed to other real estate you tubers as well as Phil, and mr Pustejovsky here isn’t flashy and isn’t critical of other channels. He’s one of the most straightforward and generous creators in terms of useful information I’ve seen. He’s dropping essential knowledge that’s easy to understand with a clear intention of educating. Thank God for you Phil. You’re doing amazing work.
Dude, I love this guy- so generous with your knowledge, I hope it’s all returned back to you with interest
I stumbled on Phil's page years ago, a complete newbie to real estate. I literally would put the kids to sleep and stay up binge watching his videos, drowning my self in as much real estate knowledge as possible. Now here I am years later, an active investor and licensed agent and can't help but smile when I watch these videos. It reminds me how far I've come and how God used Phil's content to change my trajectory. THANK YOU PHIL !
I was just thinking this morning about how to figure out the price for a house we have put our eyes on. I open RUclips and I see Phil’s video. Can’t be a better timing. OR RUclips can read our minds lol Thank you for the wealth of information on this fabulous channel!
Thank Phil your vide was right on time. I planing on refinancing, was about to start alot of changes to the house, when you said the refinancing is for repairs I'm not sweating the appraisal. The house is neat and clean, I was ready to changes sinks painting. I just make sure the house is presentable thanks.
That's wonderful news! Save those renovations for after the appraisal. Also, NOW is the time to get an appraisal because closed comps are higher than active comps in many markets.
You are awesome! Thank you for your knowledge. I wish I would have found you sooner.
Wow, I was literally watching this video as my lender calls in to tell me my appraisal came in at 135k, house is being purchased at 132k. It’s a foreclosure that was just purchased last year for 165k and appraised at 185k, tax assessed at 178k. I never make comments but just thought it was funny because my appraisal wasn’t supposed to come in until the end of next week. Great timing Phil lol
My. point. exactly.
That’s the matrix glitching bro, keep looking out for the signs!
As an appraiser with 35 years experience, I bring the value in at market value, not purchase price, and simply explain in the appraisal the circumstances surrounding the purchase, i.e. buyer is making a prudent purchase at below market value for xyz reasons...not rocket science, and as long as the appraiser explains what they did and why they did it, no problems from underwriters
Phil, you are giving all of us so much useful information. Thank you for what you do!
Great information! I recently had a mortgage application denied in final underwriting on a 2nd home. I believe it was due to a mistake the underwriter made in interpreting a Fannie Mae requirement. Anyways, they did everything to avoid formally transferring the appraisal to my new lender which required a signed document from their chief loan officer. The lender would not sign it and I lost $675. To me this seems like poor business practice and honestly it should be illegal. Phil, you’re videos are great. Keep up the good work.
Our first buyer fell through, underwriters would not approve their loan. We had asked 589, they offered 595 and it appraised at 595!
The second time, we asked for 595,000, they offered 595- and the appraisal came back at 550,000!!! Killed the deal! No room for negotiation.
In urgency to sell, we lowered price $20,000. In escrow now. 🤞🏼wish us luck. 😅
Hey Phil.. I just want to say thanks for all that you share. Your definitely the truth and the signal.. I have a quick question. What if your negotiating an off market deal. You offer the seller a low price based off your calculations as an investor and the condition of the house, but the owner thinks there house is worth substantially more. Would you at that point tell the appraiser the purchase price. Not trying to swindle the home owner out of there property but just trying to justify your offer price?
Use comparable sales and renovation costs to justify your offer. If you get an appraisal, that would come after you have negotiated a contract with the seller.
A property may be large (.8 acre), across a street from a lake, have a 24 X 48 extra block garage and a homd with hardwood floors, but unless a buyer cares about all of those features they aren't willing to pay for them. Men care about the garage shop but not the lake or extra yard.
Great content Phil! Can you do more in-depth videos on appraisals especially around refi?
I do those in my Apprentice Program. Very, very in-depth videos.
As for myth number 2. As an appraiser I ask for the Contract of Purchase and Sale to review if there are any terms or conditions that would effect the purchase price. If the lender says no to my request then I document that in the report that I asked and my request was denied. Then the loans officer can deal with their bank auditors when this comes up.
If an appraiser is selecting comparable sales to justify the purchase price that is against their appraisal institutes standards and the appraisal should be sent off to their governing body and they will investigate your claim and if this is found to be the case the appraiser will face disciplinary actions that may include fines and educational courses that they have to undertake.
The appraiser is to select comparable sales that are the most similar in physical and locational aspects to the property being appraised. If an an appraiser is not doing so and is diving for a number it is very obvious in the report. I have reviewed hundreds of appraisal reports and when this is the case it is extremely obvious as the adjustments are not logically and consistently applied. It is glaringly obvious. Toss the appraisal and get a different one or have another appraiser conduct a technical or market review of the appraisal.
When I am doing an appraisal for a sale I will state in the report the market value range for similar properties, if the purchase price is within that range I will then communicate to the lender, after concluding my tests on value, that the accepted offer to purchase is fair, equitable, reliable and reasonable for first mortgage financing. Sometimes such as in a hot market I will explain that the property sold at the high end of the value range. Or in a declining market that it sold in the lower range but the sale price still lays within the market value range and is still reliable for financing. The lender is the underwriter not the appraiser - if you disagree with the appraisal - then don't lend on it.
Myth #3, what you are speaking about is marginal diminishing returns. The problem is that three comparable sales will not necessarily show this on a price per square foot basis due to adjustments such as surplus lands, inground pools, tennis court. The comparable sales show a range of per square foot rates but this should be cross checked against the time adjusted historical sales of the subject property as well as the median price of similar homes in the neighborhood. The price per square foot indicator may only be used as a cross check to the value conclusion which is determined through the Direct Comparison Approach. It is NOT acceptable for residential properties to conclude market value by a price per square foot. That's a BIG no no. If you have a report such as this, then send it off to their governing appraisal body and they will investigate your claim and their professional practice committee will rip a strip off the appraiser's back.
If you are a lender and have issues with the appraisals - then don't use that appraiser! That's how you get rid of bad appraisers. The other way is to sent their report off to the governing body. The other way is to sue them in court for any damages you have incurred from relying on the appraisal. I will pay for the stamps.
Myth #2 a bit off (hopefully). An ethical Appraiser receives the Purchase Agreement and has the sales price as just another piece of information as potential Market Value. If the most recent sales do not the support the agreed price the appraisal will come in lower. This happened on 22% of my residential appraisals in 2019. 60% of these were FSBO (Fore Sale by Owner) where a Real Estate Professional was NOT used. In every case when my data doesn't support the Sales Price I asked the Home Owner or Real Estate Agent to provide their market data used in pricing the home. This is a courtesy to gather more information. FSBO's have no data to provide because the number was made up or they give me a print out from Trulia. I usually find out when Agents send over data, it is cherry picked sales out of the subjects neighborhood or much nicer homes where better/closer/more recent data was ignored. In some cases the Agreed Sale Price is the best data for Unique Homes and the Appraiser just simply supports the conclusion that the sale price appears reasonable based on available data in the area. As an Appraiser I am paid to provided a True and Credible report to the Lending Institution so they can ultimately make the final decision to loan money on the property or not. Sale prices for home can be inflated for nefarious reason such as including cars, farm equipment, in 1 case 15 acres of recreational land included in the sale price of the home (city) to avoid paying for 2 appraisals and deceiving the bank. I can only speak for my self and a few other Appraisers in the area, but we have similar war stories and my findings are not unique.
I've always thought that the appraiser knowing the "strike" price of a sale was a serious biasing factor in a loan-fueled transaction. The biggest source of bias, IMO, is the desire of the appraiser to get more and more appraisal orders (eg; continuing business) from the ordering bank. This is from my grand experience of 2 RE deals, LOL, one of which was owner financed and she knocked $100K off the $400K-425K price she had been asking....to the point where it was completely impossible to stand by and not buy it. Even though it took every cent I had. The worst RE mistake I ever made was selling that building. I left 2x the amount of money on the table than what it cost to buy the building. Horrible!
20 years in the business. Maryland markets. I like the complex properties water fronts big lots etc. you can charge more money and get longer turn times. Condos and townhomes get boring.
Really great video!
You're a beast sir... I've watched over 100 videos on real state purchase and every video more or less has the same content except yours.... Every one of your video has something new that others do not share.... Really great stuff
If you paid for an appraisal and they refuse to provide it then you paid for a service that was not rendered and could potentially file a chargeback. Check with your card issuer.
Warning. Appraisals are not a true reflection of what it cost to build a house (excluding the lot/land valuation, which is easy). There is more thought given to a value of a used car than an appraisal. Appraisals are what lenders want to pay for a house. Appraisers are not what you would assume. Architects should be hired for appraisals; people that can recognize quality or not, but lenders don't want experienced people assessing houses. Appraisers only have a few months of training at best. I dealt with four different appraisers on one project in the Charlotte NC area. None were competent. As I was walking around the project with one of the appraisers, they asked me "what kind of flooring is this" (in a bathroom); it was peel and stick vinyl; I laughed thinking it was a joke, but then I sobered-up real quick when I realized they were serious and were ignorant. Another appraiser thought that granite print Formica was actually granite. I will ask you a question: Why is it that you don't see real front porches on houses anymore and you only see "McMansion" style faux porches on houses? Because lenders won't pay for a real porch; so appraisers appoint no value; that's why. I almost made the foolish mistake of getting a Masters degree in Architecture. Luckily, I encountered the "industry" before pursuing that, which changed my mind.
Appraisal 101. Cost does not equal value.
Always great stuff Phil. Watch often but don't comment. I'm learning too much. A couple of points.
The consumer is legally entitled to a copy of the appraisal. They must be sent out within 3 days of receipt. However, most lenders won't accept a copy done for another so you may end up paying for another one anyway.
You nailed it on the bias of a purchase appraisal. How can the appraiser ignore the sales price listed right on the contract they are required to have a copy of and also when they check the MLS listing. An appraiser friend of mine once told me just what you said. The true value of a property is what buyer and seller come to agreement on. Very important however, that it is an "arms length transaction". The parties don't know each other. On a refinance however they are flying blind. Which is so why so many refinance transactions crash and burn when equity is tight. Appraisers will go conservative as they don't really have to answer to anyone on their "opinion of value". (That could be a whole other conversation).
One reason purchase appraisals come in so close to purchase contract, hopefully just above, is that if the appraiser finds easy comps to justify the contract price, they won't go out of their way looking for more comps to see just how high the value may truly be. Their only obligation is to insure to the lender that it is at least worth what the buyer is paying for it.
My biggest issue with appraisals is actually two fold. First, the appraiser is signing their name to it stating it is their opinion of value. BS. Their opinion is shoved down their throat by the comps available. That same appraiser friend also once said, if my professional opinion of value on a house is $xxx, but I don't have the comps currently available to back it up, my opinion is worthless to the lender. The other issue is why lenders are so micro focused on today's one day snapshot in time value. i.e. a purchase contract for $250k and an appraisal at $248k. The deal crashes and the parties have to redo the contract. How about CLOSE ENOUGH! Last month or next month the comps could have that value at $255k or $245k. What the lender should really focus on is what will it be worth down the road if they need to foreclose on it? That's when the value really matters. The entire lending industry, of which i'm a part, is completely a smoke and mirrors house of cards. From FICO scores to appraised values to monthly debt ratios.
hi phil. just wondering: in another video you explain what intrinsic value is, and you also mention in it that you have never purchased a property for more than intrinsic value. are you suggesting that it is never a good idea to purchase a property for more than intrinsic value? or, have you never purchased a property for more than intrinsic value due to where you live? but you otherwise would do so, perhaps, if you lived somewhere else more bubbly? thanks for this appraisal video, and hope that you are doing well. sincerely, matthew
For short term flips that you have little to no risk; the intrinsic value doesn't matter. But buying real estate for long term rental purposes; I won't buy a property, ever, above intrinsic value.
As an appraiser, I would like to add to point number 1. We CANNOT give the appraisal to the homeowner when the mortgage company orders it. The governing rules upon which our license depends, PROHIBIT us from giving the value to anyone EXCEPT those who order it. It isn't that we don't want to - we are not allowed to.
Unless provided with written authorization to release from the original client.
Great video Phil,, Keep up the great work.
thank you good info!
We want More videos Phil . Carve out more time please
I've just hired some more people to help me with delivering more content for y'all. Hopefully, Lord willing, you'll see an uptick in the coming months of more and more content. Thanks for the comment
As an appraiser of over 35 years, I think he's perpetrated some myths of his own. I'll start by saying it depends on the quality of the appraiser to begin with. Can a less than dubious appraiser manipulate the numbers, you bet. Then it depends on the definition of market value being sought/requested and the purpose of the appraisal. Get any of these wrong and may not get what you're looking for. Further, his explanation of the adjustments indicates he does not have a command of the appraisal process. He's mostly spot on on #1. #2 has some truth, but again it depends on a lot of things. All that being said, if you're a flipper, you want to know market value when you are ready to sell. When you're buying you have to pay below market value. That's where your profits are. Without specific instructions otherwise, the appraiser is going to give you market value and that might be what you need to know.
It reminds me of what Bill Clinton said, "...It depends on what the meaning of the word "is", is...". There is only one definition of the market value, regardless of its purpose.
You are mistaken. I’ll bet I know more about appraising than you. But that’s not what’s important here. What a flipper needs to know is what can they sell the property for when it’s finished. Take that number, back out how much you need to make and how much you have to spend to get it ready including holding cost , that’s the most you can pay for the house. Otherwise you just walk away. Pretty simple. Ideally you don’t want to be the most expensive property in the neighborhood because that makes it harder to sell. I avoid homes with adverse site influences for the same reason.
Very informative Phil💪
Thank you for your knowledge. I've been owner financings(rent to own)my remodels with a one year warranty, 30 years at 7% with as much down as i can get. BUT... none of my customers have ever asked for an appraisal. Should I be providing one upfront anyway???
No; no need to provide it if they aren't asking.
Man this is one epic video, thanks Phil! One question, I know that you covered Rental Properties, did you do a video on BRRRR (Buy Rehab Rent Refinance and Repeat). I hear investors talking about this method a lot.
This gives me a great idea for a new video! Thanks. So the process of BRRRR is what real estate investors have been doing for centuries. Recently, that process was given an acronym as if it's a special technique when it's how almost every real estate investor has always conducted their long term investing affairs. To summarize, they buy properties with the intent to rent (rather than flip); sometimes those properties need to be renovated prior to being able to get maximum market rental rates; so the rehab work is done, and then the property is leased out, then, in order to get back some of the cash they invested (and because it's rented at maximum rental rates), the investor refinances and then they go look for another deal. The flaw in even giving the process an acronym is that the focus moves towards the wrong goal. What is most important is not following the BRRRR process, but instead, the key is buying the RIGHT properties that cash flow the best and are easiest to get the best loans so that you can optimize every part of that process. Scan through my previous videos to see the titles that best pertain to all that; such as, 3 Ways to Turn a House into a Cash Flowing Machine: ruclips.net/video/wyooI5J91UM/видео.html
@@freedom_mentor Here is the funny part, I just watched that video. Thanks for the Rent to Own idea! You're welcome, I am a watcher of your channel and have a constant hunger for learning. Flipping is a little risky for my type of investing, but I've been looking more into Rental Properties.
@@supermario9200 Flipping properties usually has far less risk than rental properties.
@@freedom_mentor I may give it another look into it, thanks.
Good friend of mine just got caught in the new Washington rent controls law and his "safe and secure" apartment building investment he just made is turning into a nightmare for the next 6-12 months. Flipping allows you to get in and get out. Sometimes you get stuck with rentals that are not easy to resell or get out of.
The value of real estate is a function of the cost and structure of the financing available at purchase or refinance.
Just had an appraisal done…. Matched my offer to the penny.
Great videos. Thank you so much.
I am getting a refinance on my mothers home which I live in , as a painter and a home repair specialist I thought I had a grip on what impacted a appraiser. SIR, I did not. The information you imparted was invaluable, I consider myself to have higher than average common sense and college education. It is clear now I was focusing my time in the wrong order. PS short precise, to the point and well thought. You should make a video on how to make a video. 10 out of 10!
I appreciate the comment! I've been posting videos on RUclips for more than 10 years and at this point, I have a video for just about every question I have ever been asked. Including a video on how to make a video :) ruclips.net/video/Rx2jFEThw8E/видео.html
Hi Phil, I have a question. My older client approached him and asked him if he wants to purchase their house. It’s located in Tacoma,WA it’s a 3 bedrooms 2 bathrooms. I did a comp on it and it shows $183 but she said wants to sell to my brother for $155,000. Do you think it’s a good deal? She said price is still negotiable. Property has new roofing, new water heater,needs cosmetic and probably new windows. My brother wants to buy the property but his bank told him that he’s not qualified because his salary doesn’t qualify him. I told him perhaps he should wholesale the property but I don’t know how to do the wholesale deal let alone put it under contracts. Can you advise on this please? Thank you so much sir.
Your brother should take this free video course: courses.freedommentor.com
I am considering going into the appraiser field (no experience). Your channel is really helping me grow faster. However I called a few appraisers in Las Vegas and they discouraged me from entering the field saying they are not sure if it's worth the time and the job Outlook is not good. Just wondering where u think the field will be in ten years?
It is such a great business. Those people you called don't want competition.
This is my question as well. Becoming an appraiser sounds so interesting but I’ve read several times that the field is nearly impossible to get into because no one will mentor you.
Erin2002 I heard the same thing. But this is only because trainees do not think about what they can offer the supervisor. I plan on going through the the county assessor office. I also plan to work for free for a month. I am also willing to sign a 2 year non compete. From what I get from tons of research, you must make it advantageous to the mentor.
As a listing agent, doing a CMA on a church is difficult to do, with that being said, is square footage the way to get an accurate price to list?
Ask an appraiser that does church appraisals. It's MUCH more than just square footage. I helped my church purchase a new building and the appraisal is much more complicated than a residential single family home.
Make more videos Phill!
Big Phil keepin’ it poppin’
We gotta convince sellers or buyers about the price.
How then if you are starting with little money to get a property, and your property is selling below fair market value and your trying to be creative with the seller, because it needs some rehabbing. So your trying to get more money out of the mortgage company to help with the purchase for the buyer, because mortgage company wont do a HELOC on the deal?
Take this free video course: courses.freedommentor.com
Thank you! I was wondering, would you know how much a finished basement, HVAC, and a garage increase the value of the property (percentage-wise)?
Basement square footage is usually 30% of main level from a price per square perspective, although that can vary depending on the surrounding comps. Garage space usually ends up being about the same value as the cost to build it but again, it too depends on the surrounding comps. When you compare houses that don't have a garage (and that too depends, whether 1, 2 or 3 car) versus those that do, everything else being equal, that's another way to determine garage value.
@@freedom_mentor and more importantly, does the lot have enough set backs/space to add more garage space, which is vital. Depreciated cost analysis is one way to solve, if inadequate paired market data is available..
My lender just waived the appraisal of the home that I am purchasing. Should I order my own? There is a house in same subdivision with exact floor plan that just accepted an offer after 3 weeks of listing. That house is priced $60k over the house that we are purchasing. Sure our house needs more touch ups like paint to get it to the level of the more expensive house. Would YOU order an appraisal knowing the info above? I have an inspection ordered for tmrw.
What did you end up doing?
Today I decided to get my real estate license. Something happened to make me finally realize that not having one is standing in my way.
I should also call you to tell what I am looking at, Hint. 4 BR house. 1/2 acre 211 days on market. Foreclosure. $35K. Needs roof, remove overgrowth, clean, clean, clean, and paint. ARV and being conservative... $120k. Me: Over 30 years in the repair/remodel industry working for others.
This video explains the pros and cons of having a license for investors: ruclips.net/video/7vS9basu8uc/видео.html
Mark this day as when you decided to get your RE license.
Mark the day when you decide to drop your RE license.
A license (and membership with NAR) gets you access to the MLS, but online automation obviates the MLS; you don't need a license.
Having a license is more of a burden than a blessing; that's my two cents worth, your mileage may vary.
@@UltimateBargains I have to wait on others to see a property. With a license, I don't. Plus I get a cut on the commission. I know I don't need it. But it helps me to be more serious about it. So far all I have been doing is talking about doing this.
@@freedom_mentor thanks!!
You are a stud Phil!! Thank you so much! If you come to SLC, I owe ya dinner! Thanks man!
He is sitting by the pool at his mansion having a cool drink. Sorry. He won't hang with you.
@@lostintime8651 I know, but I like to show my appreciation. Mind your own business.
@@pharmdog1 I just want to bring you back to Earth. You are welcome.
@@lostintime8651 Thanks pal.
@@pharmdog1 I'm here for you
Appraised a house last week with purchase agreement in hand for $575,000. Appraised at $500,000. Just saved the buyer from over paying by $75,000. They thanked me. #2 is your biased opinion.
You just lost the Seller $75,000. The Buyer was willing to pay $575,000. And you lowered every neighbor's value with that move. Thanks.
@@freedom_mentor lol. Seriously? He can still pay $575k. He just can't use all of the banks money. Bank is not going to lend the full amount on that LTV. Not every appraisal meets contract price. It happens.
As a seller I would like to order my own appraisal that I pay for so I can see it. Any advice on vetting them?
That is a very good question. Use Google Maps and look for the ones with the most positive reviews. That may be the only way to really vet out appraisers quickly.
There is a MYTH #4 . The appraised value that the appraiser put in the report is final!!!! Answer : NOTTTTTT . You can always ask for a second appraisal. and usually if between the first appraiser and second it is a discrepancy of more than 10% Variance it is time for a 3rd one . The rule of thumb is if values between 2 reports is under 10% discrepancy (as closer as better) you got there a pretty good chance for a good report. If not, get a another one. Will you agree Phil??!?!
It depends. Assuming that all the appraisers are anchored to a sales price (in the case of a purchase) or the needed amount for a successful refinance, the appraisal amount will be predicated on the comps the appraiser selected and the adjustments that were made on those comps. Sometimes, 10 different appraisers will all come to very, very similar results, if there are only 3 comps in the area and they are all identical. However, if there are 6-10 comps that an appraiser could use and they are all very unique so the adjustments could swing the end result in one huge direction or another, then it could be very, very different results. In some cases, I'll direct my Apprentice to demand (or pay for) a second appraisal. In other situations, I know that it won't be any use to do so.
@@freedom_mentor i Agree with you . It is still good to have the "myth" clear, that if you are not happy... There are chances for a second or... more, Opinions. And just like you said, if you feel is worth it ... You can do it.
I do a lot a reviews for reports... And sometimes you will be surprised about the poor quality that some appraisers can put into as work. By the way, I am listening to you since 2012. "I listened to like an 1h audio..where you tell about your start up and how you were living a the mobile home..." good stuff. I try a few times to get in touch with you (including passing by your miami Beach ups address) ...still thanks for your reply. Peter . Appraiser/investor in SE fl. Thank you
Would asking for a copy of the appraisel be a problem? or asking the bank who they would approve of doing the appraisel and pay them like that?
Not a problem in most cases. Always ask for it. They may not give it to you, but you can always ask. And they won't let you pay the appraiser directly.
You are entitled to have your appraisal by law
Hello, thank you for you video. I have a question. We are looking to buy a commercial building in a small town and we had the bank order an appraisal before making an offer. Real estate agent said that is illegal. Is this true?
I have no idea what that agent is reporting as illegal from what you have shared. You can order and purchase an appraisal for any property at any time. The one drawback to getting an appraisal on a property you don't have under contract is that the property owner may not allow your appraiser to access the interior; which would prevent the appraiser from having confirmed measurements and other details about the interior. But he could still do a really helpful appraisal even without interior access.
@@freedom_mentor thank you so much for your response. So from that realtor was some kind of trick to put us in some kind of corner.
I don’t feel anymore to trust her. But I don’t know what I can do. The hall cycle was started, we saw sign on the window: for sale. We want that building. We try to find the owner , call him, but couldn’t. He was not with any realtor. We called randomly to our local realtor and asked about that building. One of them found his number and connected us.
What is not so feel good that the person who sales the building sign contract with this realtor.
Don’t know my options. Should I ask another realtor to help us to do the cycle , from our side? Because I don’t want this lady ( trick realtor) on both sides. If she did something weird, she might do something else.
A appreciate very much if you answer.
Also I want to sale our house and I don’t know ... should I try to sale myself? Or it will be better find realtor? But our realtor companies are so concerned to each other, because small town.
I did buy a house and bid 168k on it and the appraisal came in at 150k. That's quite a gap. Are fha appraisers different?
FHA Appraisers do have to assess certain details of the property beyond a Conventional Appraisal but the end Appraised Value should be no different whether it was FHA or Conventional
Actually it was good for me. I saved 18k, plus paying lower taxes on it.
What about appraisals for refinances? No sale appraisals? Do those come out to the comps similar to in a sales based appraisal?
Appraisals for refinances usually come in much higher than what you could sell the house for on the open market.
I purchased a house two years ago the appraiser went to my house they did a new kitchen I’ll post a head arm eight circuit breakers him but I was supposed to have 30 of them the M had a fuse box that’s all him didn’t know how old it was they didn’t change anything who is liable for that
As an a certified appraiser, #2 and #3 are not entirely accurate. Do I frequently appraise properties for the sale price? Sure, but if that number is supported by market data and was typically exposed to the market, etc, then it’s a fair representation of market value. But I have been both above and below the sale price on MANY occasions and have not lost clients because of it. I also never know what the “target” is for a refinance because none of my clients share that information, as they shouldn’t, and I never ask a homeowner what number they are needing for their loan to work. All of that said, there are those appraisers who care more about making their clients and borrowers happy than they care about producing credible appraisal reports.
#1 is spot on... and don’t call me angrily and tell me you paid for the appraisal!
Thanks for the info phil is very helpful,but I still have a doubt on how many times will I need to pay for an appraisal before I buy my house..at what point of the process it is good to make an appraisal??
"Make" an appraisal? I'm not quite sure I understand your question? Are you asking me "when" in the home buying process you should "order" an appraisal?
Just confirm ahead of time that you get a copy of the report. If not, go with another mortgage lender. If they say "No we won't provide it to you", take your business elsewhere if that matters to you. Mortgage brokers can source from all sorts of places. Surely one can find you a lender that'll share the report.
Thanks for the signal Phil I try to tell my clients this all the time as a lender because they still think appraisal value is market value it’s been the bane of my existence lol
It’s all about appraisal timing strategy with comps pending, and sold, and what will sell soon.
Amen! Keeping preaching the good word.
Thank you for what you do sir. I'm working a deal in Columbus MD, sir the property is free and clear paid for, my offer is $270k with $30k in repairs the seller rejected my offer due to tax rates based on a $350k appraisal im not understanding how do I over come this? Please respond asap the arv is $411k thank you sir.
Do you know the Seller's basis? Is it $0 because he inherited it? Regardless, you could make a creative Land Contract offer so that the Seller does not incur a taxable event. There's so much you haven't shared which could help me with my answer and it's too complicated to cover it all in this message box so I wish you all the best.
@@freedom_mentor Mr Phil thank you so much for responding, why this is important so many that put out info never respond, for a man such as your success to respond mean so much. The reason for this late reply is I just lost the love of my life of 30yrs and my only child a son 24yrs old a week a part to the virus. Its the hardest thing I have ever gone thru and every day is a challenge. My business is my medication it was shut down. Now its like I'm a newbie starting it up again whats so surprising sir is vendors and funding is treating me as a newbie because my credit and income took a big hit and it didn't matter about my situation but was heart breaking how parts of the industry has turned there backs on me.
Now about the deal. The owner is retired from our gov NSA lived in the property for over 30yrs property is paid off. Wife is ready husband is concerned about money lost if he accepts my $270k offer when appraisal is $350k approx $80k loss as they see it. Sir help me understand what other info can I provided you with to help me provide a service to help this family. They are wanting to leaving area and use money from sell to purchase new home. My offer i feel is maxed at $265-$270k with $25k-$30k in rehab. With Arv of $411,600 with Ave sold price for area $453,625. I'm working this virtually im in Oklahoma city they are in Maryland. Thank you sir once again
Matthew Mitchell
www.loyalty-house-buying-investorfunding.com
Loyaltyhousebuyinginvestments@gmail.com
Phil is back !
The lender gave me a copy of the appraisal, can i hand that over if iI ever change?
The new lender will require the appraisal be updated to be specific for that new lender and that's where the conflict occurs.
This is good shit.
Not true with VA Loans. buyer pays for appraisal and even if one switches va lenders, that va lender who ordered it MUST give up the va appraisal which is good for 6 months on the home. I did it. AlSo, if a buyer already paid for the va appraisal, but does not close, it is still there in the VA system for any other va eligible buyer for that specific home.
They "must" but many drag their feet and make it very difficult. Good point though.
I'm #100 thumb up!!
Thank you...
Rule number 3 is what I see as a big roadblock for folks trying to BRRRR. The only way around it is if you have a huge down payment
Good call. Usually, lenders require at least 12 months before a cash out refinance on an non owner-occupied loan.
An appraisal is an “opinion “ .. period .
Entire real estate process is trash. From mortgage, to appraiser, to inspectors, to home insurance, to title insurance, to realtor commissions, to all the extra unnecessary bells and whistles that want to simply extort the Consumer on a large purchase.
As an appraiser, it would be stupid to cancel a sale with a market value 3k under the selling price!!!
I think the word you are looking for is "Arrogant" for a appraiser to think he is that good or godly that he somehow they extracted enough information out of the market to make to make that call. 1.1% determination on a home with a median value in my area of $260,000. I agree that would be silly. 17 year appraiser. Can you imagine trying to defend that in court or in front of the Appraisal Board? 5%, I may dig in my heals if my data is real good.
Myth number 1 . yes, the lenders they do own the appraiser report , but you have the right to get a copy for the very fact that you paid for it (federal law). No you can not use it to other mortgage company true because it is certified to that particular lender, but you still have the right for a copy. The usage vs the right to have a copy are two different thing. Lenders must inform mortgage applicants of their right to the appraisal report, even though they are not mandated to provide automatically.
Myth 2 ...you have tons of crooked or badly trained appraisers in your area...lol... yes, sales price influence, since if there is somebody willing and able to pay that must influence, however, if market reflects some different that sales price can be completely ignored and it must be detailed in the report. We are not in 2004-2005 when appeasers were pushed by lenders to hit numbers and if they do it is not a truly valid report to start with.
Myth 3 property can be appraised for higher value than sales price, if sales price is lower than market vale it means generally either a distressed sale or not an arms length sale . If seller needs to relocated and he sells a property $30k under market value, that sale is not an arms length sale and it does not change market value.
The square foot adjustment is vary due to the fact what is the general size in the neighborhood. There are such thing as over improvement that can be either condition , size or features. that might demand minimal or no adjustment, in extreme cases even a negative thing on the report.
I appreciate your comments (Appraiser 17 years). Like you, I could have written a book on this video. Not to disagree or bash it but Myth #2 and #3 are very deep and complex topics that maybe only an Appraiser can appreciate, witch I do. Have you ever been asked a "simple" "general" appraisal question by a home owner and after 30 seconds of answering it their eyes have glazed over and your are disappointed because you are just half-way through point number 1 of 40. We know way too much to ever explain to the layman in a short answer. I have had banks ask if I could call and explain my findings to the disgruntled home owner. My response is, " with your written permission I will but my guess is this is not going to end well". I call the home owner, introduce my self, give them my email address and ask them to send over all over the market data they used to reach their value conclusions and specific disputes in my report. I tell them no conversation about your home value until I receive their market data. Guess what, I have never received the data, therefore never had a conversation with a homeowner. Learn that one from an old appraiser.
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Phil 😑 not true. I can send you emails and screenshot of myself and partners being able to move fha Apprasial report to another lender /loan officer. You give out rich information most times however occasionally you give wrong information
Good call on FHA appraisals. They stay glued to the property, not the borrower. Which is both good and bad. Thanks for the comment. (I guess I was focused on the Conventional side with Myth # 1)
@@freedom_mentor - correct my friend! PS You're such in a good place lately- shows very well ;)
11:42
Value is always subjective. I don't care who appraises it, what matters is what someone is willing to pay for it.
There is a difference between "market value" (which is a prediction of what a property will sell for under normal conditions), "appraised value" (which is what an appraiser will appraise it for) and "value" (which is a subjective figure based on what at least one rational person is willing to pay for it)
@@freedom_mentor My only issue is that if one doesn't like an appraiser's initial valuation, a second appraisal by someone else will often yield a different value, hence being subjective.
Here is the definition of Market Value that most appraisals are based upon. Read it carefully and see if "what someone is willing to pay" is in there......."Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: buyer and seller are typically motivated; both parties are well informed or well advised, and each acting in what he or she considers his/her own best interest; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."